On July 28, 2010, the Securities and Exchange Commission (the “SEC”) adopted amendments to Form ADV, and related rules under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), which require advisers to deliver to clients and prospective clients a narrative brochure in plain English describing the adviser’s business practices, confl icts of interest, risks and disciplinary history. A new adviser must comply with the new form beginning January 1, 2011. An existing adviser must comply with the new form as of the date of its fi rst annual update after January 1, 2011. For most advisers, this will be March 31, 2011. The amendments and related rule changes impact the format and content of the Firm Brochure, as well as updating and delivery requirements. In addition, the amendments create a new Brochure Supplement containing information about certain advisory personnel.
- The Firm Brochure (Part 2A)
The amendments include substantial revisions to the format and content of the Firm Brochure. The new form uses a narrative format rather than a check-the-box format and is intended to provide more detailed disclosure on the adviser’s business practices with an emphasis on confl icts of interest and risks. Although the new form contains many items that appeared in former Part II, many items are entirely new and many items include changes, often subtle, to items that appeared previously. The new form calls for much of the same information previously requested, but presents it in a different way and often in more detail.
In addition, the new Firm Brochure must be written in “plain English.” All items must be presented in the order shown.
We recommend that advisers take a fresh look at their disclosure and start by compiling an inventory of business practices, risks and potential confl icts. Particular emphasis should be given to identifying potential confl icts of interest. We also caution against merely cutting and pasting from last year’s document, as such an approach may result in missing, incomplete or out-of-order responses.
Item 1. Cover Page
Item 1, which is entirely new to Form ADV Part 2, requires that an adviser disclose the following on the cover page of its brochure: the name of the fi rm, its business address, contact information and website (if applicable), and the brochure’s date.1 If an adviser refers to itself as a “registered investment adviser,” it must include a disclaimer that registration does not imply any particular level of skill or training. In addition, the cover page must include a standard legend for all advisers.
Item 2. Material Changes
Item 2, which is entirely new to Form ADV Part 2, requires an adviser that is amending its brochure to identify and discuss any material changes since the last annual update on the cover page of the brochure or on the page immediately following the cover page. Item 2 is designed to make clients aware of information that has changed since the prior year’s brochure that may be important to them.2 Advisers may include the summary in their brochure or as a separate document that must be fi led with the SEC as an exhibit to Part 2.3 If the adviser prepares a summary as a separate document, such document may also be used to satisfy an adviser’s annual client delivery obligation.4 If an adviser includes the summary of material changes in its brochure and amends its brochure on an interim basis between annual updating amendments, the adviser should consider whether it should update its summary of material changes to avoid confusing or misleading clients.5 The summary should contain only as much information as is necessary to inform clients of the substance of the changes to the adviser’s policies, practices or confl icts of interest so that they can determine whether to review the brochure in its entirety or to contact the adviser with questions about the changes.6
Advisers should develop a consistent framework for assessing materiality. Describing all changes is not necessarily the right approach.
Item 3. Table of Contents
Item 3 of the brochure requires a table of contents with enough detail to permit clients to easily locate the covered topics. As discussed above, the information required by revised Part 2 must appear in the order of the form, and contain the same headings as the items listed in Part 2A to facilitate comparisons across multiple advisers.7
Item 4. Advisory Business
Item 4 requires an adviser to provide a general description of its advisory business. An adviser must discuss how long it has been in business, the types of advisory services it offers and whether it holds itself out as specializing in a particular type of service and must identify its principal owners.8 In addition, an adviser must disclose the amount of client assets it manages on both a discretionary and nondiscretionary basis and the date as of which these amounts were calculated.9 In order to provide clients with a better understanding of the scope of its business, an adviser may compute its assets under management using a method that differs from Item 5.F in Part 1A of Form ADV.10 Advisers that elect to use a methodology different from that contained in Part 1A must maintain documentation describing such method.11 Advisers must update the amount of client assets under management at least annually, but they must also make interim amendments for any material change to the amount when fi ling an amendment required by any other portion of the form.12
Throughout the form, make sure you understand whether the question relates only to the fi rm, its management persons or its related persons. Item 4 relates to the fi rm. In addition, the methodology for calculating assets under management in Part 1 may differ from the methods you have historically used. Make sure you fully understand the new methodology.
Item 5. Fees and Compensation
Item 5 requires an adviser to describe how it is compensated for its advisory services, provide a fee schedule and disclose whether fees are negotiable.13 In connection with this Item, an adviser must disclose whether it deducts fees from clients’ assets or bills clients for fees incurred and the frequency of such bills or deductions. An adviser must also describe any other types of fees or expenses that clients may pay in connection with its services (e.g., custodian fees or mutual fund expenses), disclose that clients will incur brokerage and other transaction costs, and direct clients to the section(s) of the brochure that discuss brokerage. If an adviser charges fees in advance, it must explain how it calculates such fees and refunds prepaid fees when a client terminates its contract before the end of a billing period. Item 5 also requires that an adviser disclose whether it, or its personnel, receives compensation attributable to the sale of a security or other investment product (e.g., brokerage commissions or asset-based sales charges or service fees from the sale of mutual funds), the confl ict of interest such compensation creates and how the adviser addresses this confl ict.14
Item 6. Performance-Based Fees and Side-by-Side Management
Advisers that charge performance-based fees or that have supervised persons who manage accounts that pay performance-based fees must disclose this fact under Item 6.15 If an adviser also manages accounts that are not charged performance fees, Item 6 requires the adviser to discuss the confl icts of interest that arise from simultaneous management of such accounts and describe how the adviser addresses related confl icts (e.g., through trading or other policies that are fee neutral).16 Brochures that are delivered only to “qualifi ed purchasers” (as defi ned under the Investment Company Act of 1940) are not required to include a description of how the adviser is compensated for its services.17
Item 7. Types of Clients
Item 7 requires the adviser to describe the types of advisory clients the fi rm generally has (e.g., individuals, trusts, investment companies or pension plans). Item 7 must also include the adviser’s requirements for opening or maintaining an account (i.e., minimum account size).
Item 8. Methods of Analysis, Investment Strategies and Risk of Loss
Item 8 requires an adviser to describe its methods of analysis and investment strategies and to explain that investing in securities involves a risk of loss that clients should be prepared to bear.18 Under this Item, advisers must describe the material risks involved for each signifi cant investment strategy or method of analysis they use and each particular type of security they recommend, with increased detail for those risks that are unusual.19 In the Adopting Release, the SEC noted that a method of analysis or strategy would be considered “signifi cant” if more than a small portion of client assets are advised using the method or strategy.20 Finally, for those advisers that employ strategies involving frequent trading, Item 8 requires a description of how such trading can affect investment performance, including the higher transaction costs associated with the strategy.21
Risk disclosure appearing in Form ADV should be consistent with disclosure used in other channels, including offering memoranda, websites and marketing materials. Such disclosure may, however, provide greater or lesser detail than other channels. Each adviser should carefully review its own circumstances.
small portion of client assets are advised using the method or strategy.20 Finally, for those advisers that employ strategies involving frequent trading, Item 8 requires a description of how such trading can affect investment performance, including the higher transaction costs associated with the strategy.21
Item 9. Disciplinary Information
Item 9 requires disclosure of any legal or disciplinary event that would be material to a client’s (or prospective client’s) evaluation of the integrity of the adviser or its management personnel.22 This Item incorporates into the brochure the disciplinary disclosure required under Rule 206(4)-4 under the Advisers Act.23 Items 9.A, B and C provide a list of disciplinary events that are presumptively material if they have occurred in the previous ten years.24 If an adviser (or any of its management persons) has been “involved” in one of the events listed in Item 9, such involvement must be disclosed.25 Item 10 does not require disclosure of arbitration awards and claims, as contemplated in the Proposing Release. However, the Adopting Release notes that advisers should carefully consider whether a particular arbitration award or settlement involves or implicates wrongdoing and/or refl ects on an adviser’s integrity.26 As was required by Rule 206(4)-4, disciplinary events that are more than ten years old must be disclosed if the event was so serious that it would be material to a client’s (or prospective client’s) evaluation of the adviser or the integrity of its management personnel.27 The Adopting Release notes that an adviser’s fi duciary duty of full and fair disclosure requires it to continue to disclose to all clients (including those clients to whom the adviser is not required to deliver a brochure) its material disciplinary and legal events or its inability to meet contractual commitments.28
Item 10. Other Financial Industry Affi liations and Activities
Item 10 requires an adviser to describe any material relationships or arrangements it (or any of its management persons) has with related fi nancial industry participants, any material confl icts of interest that these relationships or arrangements create, and how the adviser addresses such confl icts.29 Financial industry participants include, but are not limited to, broker-dealers, futures commission merchants, commodity pool operators and commodity trading advisors, investment companies or other pooled investment vehicles (including private investment companies), sponsors or syndicators of limited partnerships and real estate brokers or dealers.
Item 10 extends to the fi rm and its management persons. Other affi liations are a critical source of potential confl icts, and should be carefully reviewed.
If an adviser selects or recommends other advisers for clients, Item 10.D requires disclosure of any compensation arrangements or other business relationships between the advisory fi rms, the confl icts of interest created by any such arrangements, and a discussion of how these confl icts are addressed.30 This disclosure in Item 10 is intended to highlight for clients an adviser’s other fi nancial industry activities and affi liations that can create confl icts of interest and impair the objectivity of the adviser’s investment advice.
Item 11. Code of Ethics, Participation or Interest in Client Transactions and Personal Trading
Code of Ethics. Item 11, which is substantially identical to the previous disclosure requirements of Item 9 of previous Part 2, requires an adviser to briefl y describe its code of ethics and state that a copy of its code is available upon request.
Participation or Interest in Client Transactions. If an adviser or a related person recommends to clients, or buys and sells for client accounts, securities in which the adviser or a related person has a material fi nancial interest, Item 11.B requires the brochure to discuss this practice and the confl icts of interest presented.31 Any practices giving rise to these confl icts must be disclosed, as well as the nature of the confl icts presented and how the adviser addresses such confl icts.
Personal Trading. Items 11.C and 11.D govern disclosure of personal trading by the adviser and its personnel. Item 11.C requires an adviser to disclose whether it or a related person (e.g., advisory personnel) invests (or is permitted to invest) in the same securities that it recommends to clients, or in related securities (such as options or other derivatives). If such personal trading is permitted, the brochure must discuss the confl icts presented and describe how the fi rm addresses these confl icts.32 Item 11.D, although similar, requires a discussion of the specifi c confl icts that an adviser has when it or a related person trades in the same securities at or about the same time as a client.33 An adviser should respond to this Item by explaining how its internal controls, including its code of ethics, prevent the fi rm and its staff from buying or selling securities contemporaneously with client transactions.34
Item 12. Brokerage Practices
General. Item 12 requires an adviser to disclose the manner in which it selects brokers for client transactions and determines the reasonableness of broker compensation. In addition, this Item requires advisers to disclose how they address confl icts of interest arising from their receipt of soft dollar benefi ts (i.e., research or other products or services they receive in connection with client brokerage).35
Soft Dollar Practices. Item 12 requires an adviser that receives soft dollar benefi ts in connection with client securities transactions to disclose its practices in a specifi c enough manner for clients and prospective clients to understand the types of products or services the adviser is receiving and permit the client to evaluate the potential confl icts of interest associated therewith.36 Item 12 also requires that an adviser discuss the types of confl icts it has when it accepts soft dollar benefi ts and how those confl icts are addressed, including an explanation that (a) the adviser benefi ts because it does not have to produce or pay for research or other products or services acquired from soft dollars, and (b) the adviser therefore has an incentive to select or recommend brokers based on the adviser’s interest in receiving these benefi ts, rather than on the client’s interest in getting the most favorable execution. Advisers must also explain whether they use soft dollars to benefi t all client accounts or only those accounts whose brokerage “pays” for these benefi ts, and whether soft dollar benefi ts are allocated proportionately to the soft dollar credits different accounts generate.37
Client Referrals. Advisers that use client brokerage to compensate or otherwise reward brokers for client referrals must disclose this practice, the confl ict of interest it creates, and any procedures the adviser used to direct client brokerage to referring brokers during the last fi scal year (i.e., the system of controls used by the adviser when allocating brokerage).38
Directed Brokerage. Item 12 requires an adviser that permits clients to direct brokerage to describe its practices in this area, explain that it may be unable to obtain the most favorable execution of client transactions if the client directs brokerage, and explain that directed brokerage may be more costly for clients. Advisers that routinely recommend, request or require clients to direct brokerage are required to describe this practice in the brochure, disclose that not all advisers require clients to direct brokerage, and describe any relationship with a broker-dealer to which the brokerage may be directed that creates a material confl ict of interest.39
Trade Aggregation. Item 12 requires an adviser to describe whether and under what conditions it aggregates trades. Advisers that do not aggregate trades must explain that as a result, clients may pay higher brokerage costs.40
Item 13. Review of Accounts
Item 13 requires an adviser to disclose whether, and how often, client accounts or fi nancial plans are reviewed and to identify who conducts the review. Advisers should explain what circumstances trigger a review for reviews other than scheduled reviews.
Item 14. Client Referrals and Other Compensation
Item 14 requires an adviser to describe in its brochure any arrangement under which it or a related person compensates others for client referrals and to describe the compensation. This disclosure must also include any arrangement under which the adviser receives any economic benefi t (including sales awards or prizes) from a person who is not a client for providing advisory services to clients.41 Advisers that accept benefi ts from non-clients for providing advisory services to clients must describe the arrangement, any confl icts of interest that may arise or have arisen from the arrangement and how the adviser addresses these confl icts.
Item 15. Custody
Item 15 requires an adviser with custody of client funds or securities to explain that clients will receive account statements directly from the qualifi ed custodian, such as a bank or broker-dealer that maintains those assets. Advisers must also explain to clients that they should carefully review the account statements they receive from the qualifi ed custodian. If an adviser also sends account statements directly to clients, the adviser’s explanation must include a statement urging clients to compare the account statements they receive from the qualifi ed custodian with those they receive from the adviser.42
Item 16. Investment Discretion
Item 16 requires an adviser with discretionary authority over client accounts to disclose this fact in its brochure, along with any limitations that clients may (or customarily do) place on this authority (e.g., that a client may ask the adviser not to invest in securities of particular issuers).43
Item 17. Voting Client Securities
Item 17 requires an adviser to disclose its proxy voting practices. While this information parallels Rule 206(4)-6 under the Advisers Act, Item 17 also requires advisers to disclose whether they have or will accept authority to vote client securities and, if so, to describe briefl y the voting policies they have adopted under the rule.44 Advisers must include in this description whether (and how) clients can direct voting in particular solicitations, how the adviser addresses confl icts of interest when it votes securities, and how clients can obtain information from the adviser on how the adviser has voted their securities. Finally, advisers must also explain that clients may obtain a copy of the adviser’s proxy voting policies and procedures upon request. Advisers that do not accept authority to vote securities must disclose how clients receive their proxies and other solicitations.
Item 18. Financial Information
Item 18 requires disclosure of certain fi nancial information about an adviser, when such information is material to clients. Advisers that require prepayment of fees must give clients an audited balance sheet showing the adviser’s assets and liabilities at the end of its most recent fi scal quarter.45 As part of this Item, advisers must also disclose any fi nancial condition that is reasonably likely to impair the adviser’s ability to meet contractual commitments to clients if the adviser (1) has discretionary authority over client assets, (2) has custody of client funds or securities or (3) requires or solicits prepayment of more than $1,200 in fees per client six months or more in advance.46 Item 18 also requires an adviser that has been the subject of a bankruptcy petition during the past 10 years to disclose that fact to clients.47
- The Wrap Fee Program Brochure (Part 2A, Appendix 1)
Advisers that sponsor wrap fee programs are required to prepare a separate, specialized fi rm brochure (a “wrap fee program brochure” or “wrap brochure”) for clients of the wrap fee program in lieu of the sponsor’s standard brochure. The items in Appendix 1 of Part 2A contain the requirements for a wrap fee program brochure and are substantially similar to those previously contained in Schedule H.48 The amendments contain additional disclosure items in the wrap fee brochure requiring an adviser to identify whether any of its related persons is a portfolio manager in the wrap fee program and, if so, to describe the associated confl icts of interest.49 This Item will require advisers to disclose whether related-person portfolio managers are subject to the same selection and review criteria as the other portfolio managers who participate in the wrap fee program and, if they are not, how they are selected and reviewed.50
- Delivery of Firm Brochure
Initial Delivery. Rule 204-3, as amended, requires an adviser to deliver a current brochure before or at the time it enters into an advisory contract with the client.51 The rule does not require advisers to deliver brochures to certain advisory clients receiving only impersonal investment advice or to clients that are investment companies registered under the Investment Company Act of 1940 (the “1940 Act”). The exception for registered investment companies has been expanded to cover advisers to business development companies.
Annual Delivery. Advisers must annually provide to each client to whom they must deliver a brochure either: (1) a copy of the current (updated) brochure that includes, or is accompanied by, a summary of material changes; or (2) a summary of material changes that includes an offer to provide a copy of the current brochure.52 Advisers are required to deliver the brochure no later than 120 days after the end of their fi scal year, and they may deliver either of the foregoing to clients electronically in accordance with the SEC’s guidelines regarding electronic delivery of information.53 If an adviser does not include, and therefore fi le, its summary of material changes as part of its brochure (on the cover page or on the page immediately following the cover), the adviser must fi le its summary as an exhibit to its brochure when it fi les its annual updating amendment with the SEC.54
Interim Delivery. Rule 204-3 of the Advisers Act, as amended, requires advisers to deliver an updated brochure (or a document describing the material facts relating to the amended disciplinary event) promptly whenever the adviser amends its brochure to add a disciplinary event or to change material information already disclosed in response to Item 9 of Part 2A. Advisers may also fulfi ll their obligations under amended Rule 204-3 by delivering a separate document describing the material facts relating to the disciplinary event triggering the required amendment.
- Updating Part 2A of Form ADV
The amendments to Part 2A require advisers to keep current the brochures they fi le with the SEC by updating them at least annually and by updating the brochure promptly when any information contained therein becomes materially inaccurate. Advisers making changes for both the annual and interim updates will make changes to their brochures using their own computer systems and then fi le the revised brochure through the Investment Adviser Registration Depository (IARD). If an adviser fi ling its annual update does not have any material changes to make to its brochure, the adviser would not be required to prepare or deliver a summary of material changes or prepare and fi le an updated fi rm brochure as part of its annual updating amendment. If there is an interim amendment to the brochure or the brochure contains a material inaccuracy, the adviser must fi le a summary of material changes describing any interim amendment(s) along with an updated fi rm brochure as part of its annual amendment fi ling.55
Advisers should review and update compliance materials to refl ect these changes in delivery and updating processes, and should train employees responsible for fulfi llment functions.
- The Brochure Supplement (Part 2B)
Under Rule 204-3, each fi rm brochure must be accompanied by brochure supplements providing information about the advisory personnel on whom the particular client receiving the brochure relies for investment advice. The supplements contain information about the educational background, business experience and disciplinary history (if any) of the supervised person(s) providing advisory services to the client.56 Part 2B represents the most signifi cant change to Part 2 of Form ADV in that it requires specifi c information about advisory personnel that was not previously required to be provided.
General. Brochure supplements must be written in plain English, and the amendments provide some fl exibility on the format in which the adviser may present the required information. The Adopting Release notes that some advisers may elect to include the supplement information in the fi rm’s brochure, while others may choose to prepare a supplement for each supervised person, or different groups of supervised persons (e.g., all supervised persons in a particular offi ce or work group). Brochure supplements, whether provided in a brochure or separately, are required to be organized in the same order and under the same headings as the Items appear in the form to promote comparability.57
Required Items. The brochure supplement consists of the following six Items:
Item 1. Cover Page
The cover page must include information identifying the supervised person(s) covered by the supplement as well as the advisory fi rm. This information may appear on a separate cover page or on the top of the fi rst page of the brochure supplement.
Item 2. Educational Background and Business Experience
Item 2 of the supplement requires a description of the supervised person’s formal education and his or her business background for the past fi ve years.58 If an adviser discloses a professional designation under Item 2 of the supplement, the supplement must also provide a suffi cient explanation of the minimum qualifi cations the designation requires to allow clients and potential clients to understand its value.
Item 3. Disciplinary Information
Item 3 requires disclosure of any legal or disciplinary event that is material to a client’s evaluation of the supervised person’s integrity and includes disciplinary events that the SEC presumes to be material if they occurred during the last ten years.59 As discussed above, advisers that send supplements electronically are permitted to include hyperlinks to disciplinary information available through the FINRA BrokerCheck website as well as the IAPD website.60
Item 4. Other Business Activities
Item 4 requires an adviser to describe other business activities of its supervised persons, including other capacities in which the supervised person participates in any investment-related business and any material confl icts of interest such participation may create. The item must disclose information about any compensation, including bonuses and noncash compensation, the supervised person receives based on the sales of securities or other investment products, as well as an explanation of the incentives this type of compensation creates. Item 4.B of Part 2B requires disclosure of any other business activities or occupations in which the supervised person engages if they involve a substantial amount of time and pay.61
Item 5. Additional Compensation
Item 5 requires a description of any arrangement in which someone other than a client gives the supervised person an economic benefi t (such as sales awards or other prizes) for providing advisory services.62 Examples that trigger required disclosure include bonuses based (in whole or in part) on sales, client referrals or new accounts.
Item 6. Supervision
Item 6 requires an adviser to explain how the fi rm monitors the advice provided by the supervised person addressed in the brochure supplement and the name, title and telephone number of the person responsible for supervising the advisory activities of the supervised person.
Part 2B requires that a client be given a brochure supplement for each supervised person who (i) formulates investment advice for that client and has direct client contact, or (ii) makes discretionary investment decisions for that client’s assets, even if the supervised person has no direct client contact.63 Although an adviser is generally required to provide its clients with a brochure supplement for each supervised person who is covered by the amendments, delivery of a supplement is not required for (i) clients to whom an adviser is not required to deliver a fi rm brochure (e.g., registered investment companies and business development companies), (ii) clients who receive only impersonal investment advice, and (iii) certain “qualifi ed clients” who also are offi cers, directors, employees and other persons related to the adviser.64 The supervised person’s supplement initially must be provided to each client at or before the time when that specifi c supervised person begins to provide advisory services to that specifi c client.65
Advisers must deliver an updated supplement to clients only when there is new disclosure of a disciplinary event, or a material change to disciplinary information already disclosed, in response to Item 3 of Part 2B.66 As is required for the brochure, advisers must amend a brochure supplement if information in it becomes materially inaccurate, and any new clients to whom the adviser is obligated to deliver a supplement under the amended rule must be given an amended supplement (or the “old” supplement and a sticker). Supplements (like brochures) may be delivered on paper or electronically.
- Filing Requirements, Public Availability
Advisers are not required to fi le brochure supplements or to supplement amendments with the SEC, and these items will not be available on the SEC’s public website. Advisers are, however, required to maintain copies of all supplements and any amendments in their fi les. Brochure fi lings on the IARD website will be submitted in text-searchable Adobe Portable Document Format (“PDF”). Advisers must create their brochure on their own computers, convert the fi le to a PDF, and then attach the completed document to their fi ling on the IARD, in the same way that a document is attached to an e-mail. When updating brochures, advisers must make the necessary changes to the source fi le on their own computer and then attach the revised version to their IARD fi ling. The IARD will not accept an annual updating amendment without an updated brochure. The annual updating amendment must also include a representation by the adviser that the brochure does not contain any materially inaccurate information or a representation that the adviser does not have to prepare a brochure because it does not have to deliver a brochure to any clients (e.g., the adviser’s clients are limited to registered investment companies).67
Advisers should designate a point person or group for organizing information needed for the brochure supplement and drafting the brochure supplement. Advisers will need to develop procedures for amending, updating and delivering the brochure supplement and will need to update compliance manuals to refl ect these changes.
The Adopting Release also includes amendments to Rule 204-2 under the Advisers Act, which now requires registered advisers to retain copies of each brochure, each brochure supplement and each amendment to the brochure and supplements.68 As discussed above, registered advisers must prepare and preserve documentation of the method they use to calculate managed assets for purposes of Item 4.E in Part 2A of Form ADV, if that method differs from the method used to calculate “assets under management” in Part 1A of Form ADV. The amendments also require advisers to prepare and preserve a memorandum describing any legal or disciplinary event listed in Item 9 of Part 2A and Item 3 of Part 2B for the period the event is presumed to be material, if the event is not disclosed in the adviser’s brochure or relevant brochure supplement. These records will be required to be maintained in the same manner, and for the same period of time, as other books and records required to be maintained under Rule 204-2(a).
- Effective and Compliance Dates
- Firm Brochure
New Advisers. Any adviser applying for registration with the SEC after January 1, 2011 must prepare and fi le a brochure or brochures that meet the new requirements of Part 2A of Form ADV.
Existing Advisers. An adviser that is currently registered with the SEC with a fi scal year that ends on or after December 31, 2010 must include the information required by revised Part 2 in its next annual updating amendment to its Form ADV. An adviser with a fi scal year end of December 31, 2010 must fi le an annual updating amendment under the new form no later than March 31, 2011 and deliver the brochure to its existing clients within 60 days of fi ling such amendment. Following the initial fi ling, the adviser must deliver to new clients and prospective clients a new brochure to satisfy its obligations under the brochure rule.
- Brochure Supplement
New Advisers. Advisers applying for registration with the SEC from January 1, 2011 through April 30, 2011 have until May 1, 2011 to begin delivering brochure supplements to new and prospective clients and until July 1, 2011 to deliver brochure supplements to existing clients.
Existing Advisers. Existing registered advisers having a fi scal 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 and until September 30, 2011 to deliver brochure supplements to existing clients.
FEDERAL TAX NOTICE: Treasury Regulations require us to inform you that any federal tax advice contained herein is not intended or written to be used, and cannot be used, by any person or entity for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.