Global Trustee and Fiduciary Services News and Views

Global Trustee and Fiduciary Services News and Views

| Issue 47 | 2017

deemed to be acting as an investment adviser, the

sponsor often registers them as separate investment

advisers. In 2012, the SEC staff provided relief in

the form of a no-action letter to the American Bar

Association (ABA) allowing a private fund adviser

to file a single Form ADV (umbrella registration)

on behalf of itself and other advisers that were

controlled by or under common control with that

filing adviser.

However, FormADV was designed to

accommodate registration by a single legal entity.

As a result, the registration of multiple legal entities

operating a single advisory business on a single

Form ADV led to confusing and inconsistent

disclosures. Through a series of Form ADV

amendments, the SEC has addressed these issues.

Notably, the Final Rule lists several conditions

that must be satisfied in order for a group

of related advisers to take advantage of the

umbrella registration provisions.

Qualifying for umbrella registration

An adviser (filing adviser) is required to

file Parts 1 and 2 of a single Form ADV that

includes all required information about itself

and each other adviser (relying advisers), to

use an umbrella registration to satisfy the

requirements of Form ADV. While commenters

suggested expanding umbrella registration to

apply to other types of advisers besides private

fund advisers, the SEC did not do so.

The Final Rule adopts the same conditions as in

the ABA Letter, permitting umbrella registration

if a group of related advisers is operating a single

advisory business where each of the relying

advisers is controlled by or under common control

with the filing adviser (together, all advisers), and

in accordance with the following:

• All advisers advise only private funds and

SMAs for qualified clients who are eligible

to invest in those private funds, and whose

accounts pursue substantially similar

investment objectives and strategies as those

private funds.

• The principal office and place of business of

the filing adviser is in the US.

• Each relying adviser, its employees and those

acting on the relying adviser’s behalf are

“persons associated with” the filing adviser,

and thus under the supervision and control of

the filing adviser.

• The relying advisers’ advisory activities are

governed by the Advisers Act and relying

advisers are subject to examination by the SEC.

• And all advisers operate under a single code

of ethics, single set of written policies and

procedures, and have the same CCO.

New Schedule R and amendments to Schedule D

To clarify and provide additional disclosure, the

Final Rule requires completion of a new Schedule

R for each relying adviser with respect to certain

identifying information, including organisational

form, ownership and control persons.

Effective and compliance date

The Final Rule became effective on 31 October

2016. The compliance date for Form ADV

amendments is 1 October 2017.

The SEC’s business continuity plan

requirements for advisers

On 28 June 2016, the SEC proposed a new rule

(Proposed Rule 206(4)-4 under the Advisers

Act) that would require every SEC-registered

investment adviser to adopt, implement and

annually review a written business continuity

and transition plan with certain enumerated

components, reasonably designed to address the

risks of a significant disruption in the adviser’s

operations.

The Proposing Release does not

include a proposed compliance date or timeframe.