Regulation Update: The importance of Form ADV amendments and what RIAs need to know
- April 1, 2023: Vol. 10, Number 4

Regulation Update: The importance of Form ADV amendments and what RIAs need to know

by AdvisorLaw

As a financial adviser, it’s essential to understand your obligations when it comes to filing Form ADV with the SEC or the state. Many firms are preparing for their Form ADV Annual Updating Amendment filing. This task must be completed within 90 days of the firm’s fiscal year-end, typically by March 31. Firms must also be aware of Other-Than-Annual Amendments, which can happen at any time, due to material changes in your business. Other-Than-Annual Amendments must be filed within 30 days of any material change occurring.

Form ADV is a critical document that registered investment advisers must submit annually. The document requires comprehensive information about the adviser’s business practices, fees, disciplinary history, and other crucial topics related to their services. Investment advisers must comply with this requirement to maintain transparency and ensure clients and regulators have accurate and up-to-date information about their businesses.

Maintaining compliance with SEC or state regulations related to filing Form ADV can be daunting and time-consuming, but there is plenty that an adviser can do to stay compliant. First, review your current Form ADV, in detail, before filing, so any issues can be addressed ahead of time. Second, make sure to hire an experienced attorney who specializes in securities law matters, as they will be able to advise on any complex issues that come up during the filing process. Finally, consult with other investment advisers who have experience filing Form ADV so you can learn from them and apply best practices moving forward.

Failing to maintain compliance can have serious consequences for your firm — ranging from fines to the loss of your registration. If you are found to be noncompliant, you may be subject to penalties and disciplinary action from the SEC or state regulator. Additionally, clients and potential clients may lose trust in your firm, should they perceive that it is not taking regulatory obligations seriously.

In some cases, firms may be unaware they are out of compliance until audited. This is why it’s important to stay current with regulatory changes and work with experienced compliance specialists who can help maintain compliance and avoid potential issues.

There are several material changes that could trigger an Other-Than-Annual Amendment filing requirement. For instance, the requirement is triggered when an adviser adds a new service, changes fees, adds or removes an office location or personnel listed on the Form ADV, or undergoes changes in ownership or control of more than 10 percent of voting securities (or similar interests). There may be other circumstances where an Other-Than-Annual Amendment is also necessary. Advisers must stay abreast of all regulatory changes that may affect their business.


This article was produced by AdvisorLaw. Read the original version here.



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