SEC Division of Investment Management Issues New Form ADV FAQs

By June 26, 2017New in Compliance, SEC

June 26, 2017:  As reported last year, on August 25, 2016, the U.S. Securities and Exchange Commission (“SEC”) adopted a series of rule amendments that will impact all federally-registered investment advisory firms. Specifically, the SEC is requiring additional Form ADV disclosures for registered investment adviser (“RIA”) firms related to separately managed accounts, social media accounts, types of clients, branch offices, and the use of an outsourced Chief Compliance Officer (“CCO”). The effective date of the new requirements is October 1, 2017. Therefore, any SEC-registered RIA filing an amendment beginning in October 2017, will be required to provide additional information on Form ADV Part 1.

On June 12, 2017, the SEC’s Division of Investment Management released 23 new frequently asked questions (“FAQs”) to provide guidance on amendments (the “Amendments”) to Form ADV beginning in October. Among other topics, the FAQs include guidance on (a) the “umbrella registration” approach that investment advisers, primarily private fund sponsors, use to register multiple affiliates (including related managers and general partners), (b) the reporting of significant new information concerning separately managed accounts (“SMAs”), and (c) social media disclosure requirements.

We summarize most of these new FAQs below.

The SEC’s FAQs webpage is available here:

A redlined copy of the new Form ADV Part 1A is available here:

Umbrella Registration for Relying Advisers (Schedule R)

The Amendments codify umbrella registration (originally based on prior SEC staff no-action guidance) under which advisers may file a single Form ADV that covers the “filing adviser” as well as certain affiliated advisers (“relying advisers”). The FAQs clarify that the SEC staff is only withdrawing the portions of the no-action letter relating to the umbrella registration of relying advisers.

  • Registration of Special Purpose Vehicles. An existing SEC staff position permits a special purpose vehicle created to act as a private fund’s general partner or managing member to rely upon the registered adviser’s registration. The FAQs affirm that registrants may continue to rely on this position and that these general partners and managing members are not required to be reported on the new Schedule R.
  • Exempt Reporting Advisers. The FAQs affirm that an Exempt Reporting Adviser (“ERA”) may not use the umbrella registration approach with respect to relying advisers. The SEC staff did not withdraw the FAQs outlining the use of umbrella registration for certain related general partners of ERAs.
  • Filing Form ADV-NR. The FAQs affirm that a nonresident general partner or managing agent of a relying adviser is required to file Form ADV-NR.
  • Changing and Removing a Relying Adviser. The FAQs provide guidance on how to switch a relying adviser from filing as a relying adviser to an ERA and how to delete a relying adviser from a Form ADV.

Information About Clients (Item 5.D)

  • Subadvised Assets. The FAQs provide guidance that a subadviser to an investment company, business development company, or pooled investment vehicle client should treat the entity (rather than the entity’s primary adviser) as the client for purposes of reporting on Item 5.D.
  • Pooled Investment Vehicles. The FAQs clarify that, for purposes of reporting on client assets, pooled investment vehicles are not limited to private funds (for example, real estate funds). However, the SEC staff cautioned that a “fund of one” should not be reported as a pooled investment vehicle if it effectively authorizes the adviser to provide individualized investment advice directly to the investor in the fund. (Item 5.D)

Other FAQs

  • Social Media Presence. The FAQs offer guidance on disclosing an adviser’s accounts on social media platforms where the adviser controls the content, but not including employee accounts. (Item 1.I)
  • SMA Disclosure. The FAQs offer guidance on how to answer new questions about an adviser’s regulatory assets under management attributable to SMAs, including information about the use of borrowings and derivatives transactions on behalf of SMA clients. (Item 5.K)
  • Distribution of Audited Financial Statements. The FAQs offer guidance on checking the box for delivery of audited financial statements if the audited financial statements will be distributed to the private fund’s investors as required, but have not yet been distributed. (Schedule D, Section 7.B.(1))
  • CCO Compensation. The FAQs offer guidance on disclosing whether the investment adviser’s CCO is compensated or employed by person other than the adviser for providing CCO services. (Item 1.J)


The amendments to Form ADV will not impact most advisers until they file the annual update amendments to their Form ADVs in the first quarter of 2018. Nonetheless, we urge all our clients to carefully review new Form ADV Part 1A to ensure adequate preparation time.

June 26, 2017

prepared by Horrigan Resources, Ltd.

(724) 934-0129

Not customized advice. Not legal advice.


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