The SEC has recently updated its Q&A on Part 2 of Form ADV. It clarified certain sections of the new form and explained how to respond in certain scenarios. Key take-aways from the update include:
 
Brochure Supplements

• For any permanent personnel changes in supervised persons that provide investment advice, brochure supplements must be amended within 30 days of such change and delivered to the client(s) affected by such change. In addition, the client(s) must be notified of the change in supervised persons as soon as practical and prior to the 30 day window.
• Supervised persons that simply input information into computerized programs and have NO decision making authority regarding the investment advice output of such systems are NOT deemed to be "formulating investment advice" and WILL NOT need a brochure supplement.
• A supervised person that does assist clients in selecting among a list of investment managers or investment products produced from a computerized program or questionnaire IS considered to be "formulating investment advice" and WILL need a brochure supplement.
• For supervised persons maintaining professional designations, a description of that designation must be included under Item 2 of the brochure supplement. The description must be written so that clients can understand the value of it in relation to the services provided. References to industry websites may be included as part of the description, but must be accurate as of the time of delivery.
• Only one brochure supplement must be delivered to a client participating in multiple investment programs of an adviser as long as the brochure supplement covers all supervised persons within each program that the client invests.

Learn about FrontLine's Registration and Filings Service

FrontLine Compliance, LLC is a regulatory compliance consulting firm of former high-level regulatory insiders offering customized services to investment advisers, broker-dealers, hedge funds, private equity firms, investment companies, and insurance company affiliates. Staffed by former SEC and FINRA regulators, and chief compliance officers, FrontLine Compliance provides the kind of industry knowledge, experience and expertise on regulatory issues only available from well-seasoned insiders. For more information about the firm, please visit www.frontlinecompliance.com.

FrontLine Compliance, LLC
phone: 888-518-8070
email: info@frontlinecompliance.com
www.frontlinecompliance.com
Forward to a Friend ShareThis