Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, July 21, 2010

SEC Adopts Improved Disclosure about Investment Advisers

The SEC today voted unanimously to adopt changes to the principal disclosure document that SEC-registered investment advisers must provide to their clients and prospective clients.  Form ADV, Part 2 — commonly referred to as the “brochure” — explains to the investor an investment adviser’s qualifications, investment strategies, and business practices.  The brochure in its current format requires advisers to respond to a series of multiple-choice and fill-in-the-blank questions organized in a “check-the-box” format that frequently does not correspond well to an adviser’s business.

The amendments adopted by the SEC will:

  • Improve the format and update the requirements of the brochure.
  • Expand the content to better include details most relevant to the clients of investment advisers.
  • Require brochure “supplements” to be delivered to new and prospective clients to give resume-like information about the individuals at an investment advisory firm who will provide services to the clients.
  • Ensure investors have easy access to the brochures as investment advisers are required to file them electronically for posting on the SEC’s website.

Many state-registered investment advisers also currently file Form ADV with their regulators. The Commission authorized the staff to delay publication of the revised Form ADV, Part 2 for five business days in order to work with the states to accommodate technical, state-specific changes to the items and instructions of the form. This process would enable publication of Form ADV, Part 2 as a uniform SEC-state form.

The amended rules and forms will be effective 60 days after publication in the Federal Register. Most investment advisers will begin distributing and publicly posting new brochures in the first quarter of 2011.

SEC Action | Permalink

TrackBack URL for this entry:

Listed below are links to weblogs that reference SEC Adopts Improved Disclosure about Investment Advisers:


Post a comment