SEC Proposed Rule: Changes to Form ADV

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Proposed Changes to Form ADV
Proposal Date Comment Deadline Final Rule Issue
May 20th, 2015 60 Days after Federal Register TBA

On May 20th, 2015 the Securities and Exchange Commission proposed changes to the way investment advisers will disclose financial information. Seeking to modernize, standardize, and make the information more accessible, the commission proposed that

Background

Form ADV was introduced by the Investment Advisers Act of 1940. It's purpose is to require the disclosure of information about the investment adviser's background, criminal history, assets under management, etc. [1]. The form was then overhauled by the Dodd-Frank Act adding in new requirement to provide a narrative brochure in plain English [2]. The new proposed rule seeks to modernize and streamline these requirements, as well as add in new disclosure requirements.

Changes

The new rule would require disclosure of social media activities . The information would be distributed electronically, with financial advisers being compliant if shareholder information is posted to its website. The adviser must also disclose borrowings and derivatives in separately managed accounts.[3]. Umbrella Filings will be allowed under the new proposed rules as well.[4]

Proposed Rule

References

  1. Researching a Financial Advisor: Form ADV Part II. Oblivious Investor. Retrieved on May 21st, 2015.
  2. Fast Answers Form ADV. SEC. Retrieved on May 21st, 2015.
  3. SEC Proposes Increasing Risk Disclosures By FAs, Funds. Financial Adviser Magazine. Retrieved on May 21, 2015.
  4. SEC Proposes Rules to Modernize and Enhance Information Reported by Investment Companies and Investment Advisers. SEC. Retrieved on May 21, 2015.

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