New Amendments to the Form ADV Part 2 Require Greater Plain English Disclosures
Furthermore, advisers must provide expanded responses to certain existing disclosure items, including: (1) brokerage practices; (2) whether they participate in or have an interest in client transactions; and/or (3) whether they invest in the same securities as they recommend for clients. Any related conflicts of interest must be described fully.
To assist clients in evaluating the qualification of the individuals who will be servicing their accounts, supplements to the ADV Part 2 that provide résumé-like information about such individuals, including disciplinary history, now must be delivered to new and prospective clients, in accordance with Rule 204-3 under the Act.
Finally, advisers must electronically file the new ADV Part 2, which will be publicly available to potential clients on the SEC's IARD website. Most advisers will begin distributing and electronically filing the new ADV Part 2 in the first quarter of 2011 as part of their annual renewal filings, unless an event that constitutes a material change requires an updated filing before that time.
We recommend that you review your current disclosures and conflicts of interest in light of these new requirements and contact us to discuss required amendments for your next filings. If you have any questions regarding this Alert, please contact Dan Viola at 212.573.8038 or firstname.lastname@example.org.
1 See, SEC Release No. IA-3060 2 See, SEC Release 2010-127 3 Id. ("Investment advisers must update their clients promptly of new disciplinary events or material changes to an existing event.")