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SEC’s New Form ADV Will Require Detailed Information on Separately Managed Accounts


The SEC has adopted changes to Form ADV to require reporting of information about separately managed accounts similar to information already reported on Form PF for private funds.  The new Form ADV applies to any Form filed after October 17, 2017.  The new Form will require all advisers to report the percentage of separately managed account assets (i.e. managed assets not in private funds) invested in 12 asset categories.  The Form will require such percentages at year-end for advisers with less than $10 Billion AUM and at mid-year for advisers with more than $10 Billion AUM.  The Form also requires the reporting of borrowings and derivatives in notional amount categories.  The new Form ADV also includes several other significant changes including: (i) identifying each custodian holding at least 10% of separate account assets; (ii) listing all social media pages; (iii) naming the firm that employs an outside Chief Compliance Officer, and (iv) requiring more information about wrap fee programs.  The new Form ADV also codifies current guidance about umbrella registration for private fund advisers.  Additionally, the SEC amends the books and records rule (204-2) to require retention of certain performance-related information.

OUR TAKE: Much like Form PF, the first ADV with the new separate account information will require a great deal of additional time and work to determine how to calculate and allocate the assets and notional amounts.   Once a firm determines a methodology, future years should become easier.  The other changes (e.g. umbrella registration, social media pages, technical amendments) modernize a Form that had become somewhat outdated.