SEC Proposes to Amend Form ADV and Investment Adviser Recordkeeping Rules

July 15, 2015

The U.S. Securities and Exchange Commission (SEC or Commission) recently proposed amendments to Form ADV and to Rule 204-2 (Recordkeeping Rule) and other rules under the Investment Advisers Act of 1940, as amended (Advisers Act). The Proposal is designed to require investment advisers registering on Form ADV (advisers) to report additional information to the SEC to enhance the SEC staff’s ability to carry out its risk-based examination program and other risk assessment and monitoring activities, as well as to examine and evaluate adviser performance claims. As proposed, the information to be provided under the Proposal would be available to the general public—in contrast to similar private fund filing information on Form PF, which is filed confidentially.

The Form ADV amendments would include:

  • Requirements for increased aggregate information on separately managed accounts managed by advisers.
  • Amendments to facilitate “umbrella registration” for eligible affiliated advisers.
  • Various technical amendments to items and instructions.

The rule amendments, including the Recordkeeping Rule amendments, would consist of:

  • Requirements that advisers retain, in their books and records, materials demonstrating the calculation of the performance or rate of return presented either directly or indirectly to any person.
  • A requirement that advisers preserve original written correspondence received, and copies of written correspondence sent, relating to the performance or rate of return of any or all managed accounts or securities recommendations.
  • Several technical amendments to update the text of various rules in connection with the expiration of transition periods—including those provided in the implementation the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and recent amendments to Form ADV.

This Dechert OnPoint summarizes these key components of the Proposal.

Read "SEC Proposes to Amend Form ADV and Investment Adviser Recordkeeping Rules."