Global Trustee and Fiduciary Services News and Views

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Global Trustee and Fiduciary Services News and Views | Issue 47 | 2017 17
The SEC amends Form ADV
The SEC has adopted amendments to Form ADV,
used to register investment advisers under the
Investment Advisers Act of 1940 (Advisers Act)
(Final Rule).1 The Final Rule became effective
on 31 October 2016, with a compliance date of 1
October 2017.
As a result of the Final Rule, advisers
registering on Form ADV will be required to
report extensive additional information — with
a focus on separately managed accounts
(SMAs) — which will be made available to the
general public. In addition, multiple private fund
advisers operating as a single advisory business
will be able to register using a single Form ADV.
The Final Rule is designed to fill what the SEC
believes are certain data gaps regarding SMAs
and assist the SEC in carrying out its risk-based
examination programme and further other
monitoring activities.
Amendments to Form ADV
Disclosures regarding SMAs
The Final Rule requires advisers to annually
report the percentage of SMA regulatory
assets under management (RAUM) invested
in each of 12 broad asset categories.2 Advisers
may use their own consistently applied
internal methodologies and the conventions
of their service providers to determine how to
categorise assets.
Regarding derivatives and borrowings, the
Final Rule requires advisers with at least
USD500 million, but less than USD10 billion, in
RAUM attributable to SMAs to provide certain
information as part of filing their annual
updating amendment to Form ADV. Specifically,
advisers must provide the following information:
• Advisers with more than USD500 million.
The Final Rule requires advisers to report the
amount of RAUM in SMAs, and dollar amount of
borrowings attributable to those assets, based
on three categories of gross notional exposure:
less than 10%, 10-149%, and 150% or more.
• Advisers with at least USD10 billion. In addition
to the reporting described above, the Final
Rule requires these advisers to report (based
on RAUM in SMAs) the derivatives exposure
in each of six categories of derivatives.3
Information regarding borrowings must be
reported based on the total dollar amount of
borrowings that corresponds to the different
ranges of gross notional exposure.
The Final Rule also requires that advisers
identify any custodians that account for at
least 10% of SMA RAUM and the amount held
at each custodian.
Additional identifying disclosures
Social media sites
The Final Rule requires disclosure of any social
media accounts used by the adviser where
the adviser controls the content, including
the addresses of the adviser’s social media
pages. While there is no definition of “social
media platforms,” the Amended Form ADV and
Schedule D should include platforms such as
Twitter, Facebook and LinkedIn.
Office location and activity disclosure
The Final Rule requires that advisers report
the total number of offices where they offer
investment advisory services and the 25 largest
offices (by number of employees). Advisers
are required to report for each such office the
number of employees serving in an advisory
capacity, the business activities that take place
and any other investment activities conducted.
RECENT REGULATORY CHANGES
AFFECTING INVESTMENT ADVISERS
REGISTERED WITH THE SEC
The U.S. Securities and Exchange Commission (SEC) has recently adopted
changes and proposed additional changes that will have an impact on all
investment management firms registered as investment advisers with the
SEC. Here we take a look at what some of these changes entail.