SEC Form ADV is a required submission to the Securities and Exchange Commission (SEC) by professional investment advisers. This form specifies the investment style, assets under management (AUM), and key officers of an advisory firm.
Definition
SEC Form ADV is a registration document that investment advisers must file with the SEC and state securities authorities. It provides crucial information about the adviser’s business, including the types of advisory services offered, the fee structure, and any disciplinary actions against the firm or its personnel.
Requirements
Who Must File Form ADV?
Any investment adviser registered with the SEC or with state securities authorities must file Form ADV. This includes advisers managing $100 million or more in assets and those providing services to registered investment companies.
Components of Form ADV
Form ADV consists of three parts:
- Part 1A: General information about the firm, including its business practices, the types of clients served, and any disciplinary actions.
- Part 1B: Additional information required by state regulators.
- Part 2A and 2B: A brochure that gives clients a detailed understanding of the adviser’s services, fees, disciplinary history, and relevant management personnel.
Filing Process
Step-by-Step Guide
- Prepare Information: Gather all required details about the investment firm’s business practices, disciplinary history, and key personnel.
- Create an IARD Account: Register on the Investment Adviser Registration Depository (IARD) system.
- Complete Form ADV Online: Fill in all sections of Form ADV on the IARD system.
- Review and Submit: Carefully review all information for accuracy before submission.
- Pay Filing Fee: Submit the required filing fee through the IARD system.
Key Considerations
- Accuracy: Ensure all information is accurate and up-to-date.
- Timeliness: File promptly to comply with SEC and state regulations.
- Updates: Amend Form ADV annually or whenever significant changes occur.
Historical Context
SEC Form ADV was introduced as part of the Investment Advisers Act of 1940, aiming to promote transparency and protect investors by ensuring that advisers disclose critical information about their business practices and conflicts of interest.
Applicability
Form ADV is essential for:
- Compliance: Ensuring compliance with federal and state securities laws.
- Client Trust: Providing clients with comprehensive information to make informed decisions.
- Regulatory Oversight: Facilitating regulatory oversight and reducing the risk of fraud.
Comparisons
Form PF vs. Form ADV
- Purpose: Form PF is primarily for private fund advisers, while Form ADV covers general investment advisers.
- Content: Form PF focuses on systemic risk data, whereas Form ADV provides detailed information about the advisory firm’s operations and practices.
Related Terms
- Investment Advisers Act of 1940: Legislation that governs the activities of investment advisers.
- Regulation D: SEC regulation governing private placement exemptions.
- Form U4: A form used by broker-dealers, investment advisers, and issuers to register and update the registration of their personnel.
FAQs
What is the main purpose of SEC Form ADV?
The primary purpose of SEC Form ADV is to provide transparency and essential information about investment advisers to the SEC, state regulators, and clients.
How often must Form ADV be updated?
Form ADV must be updated annually and whenever significant changes occur in the adviser’s business practices or personnel.
Can Form ADV be filed electronically?
Yes, Form ADV must be filed electronically through the IARD system.
References
- U.S. Securities and Exchange Commission. “Form ADV and IARD,” SEC.gov, accessed October 1, 2023.
- Investment Advisers Act of 1940, 15 U.S.C. § 80b-1.
Summary
SEC Form ADV is a crucial document for investment advisers, providing detailed information about their business practices, fees, and disciplinary history. Filing an accurate and timely Form ADV ensures compliance with regulatory requirements, fosters client trust, and aids regulatory oversight.
