Your Investment Advisor Needs To Update Policies & Procedures Due To New Form ADV Part 2

Thursday, April 14, 2011 16:24
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Your Investment Advisor Needs To Update Policies & Procedures Due To New Form ADV Part 2

 

Now that your investment advisor has completed its new Form ADV Part 2, it’s time to update your investment advisor’s written policies and procedures to reflect the regulatory changes related to the Form ADV Part 2.

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If you have not already done so, at a minimum you need to revise your investment advisor’s policies and procedures to disclose the following:
  • the requirement to use the new Form ADV Part 2;
  • the requirements for preparing and maintaining the Form ADV Part 2B supplemental brochures;
  • the new submission requirements for the Form ADV Part 2 through the IARD system;
  • the new initial, annual, and other than annual delivery requirements for Form ADV Part 2A and the Part 2B supplemental brochures; and
  • the annual and other than annual amendment requirements for the new Form ADV Part 2.

It is likely that your investment advisor will have other policies and procedures that need to be updated. You should carefully review your investment advisor’s policies and procedures to ensure that all required updates are made.

 
Not maintaining adequate written policies and procedures may result in a violation of Rule 206(4)-7 of the Investment Advisers Act of 1940 (“Advisers Act”). Additionally, not updating your investment advisors written policies and procedures to reflect the new Form ADV Part 2 requirements may result in violations of Advisers Act Rule 204-1 requiring amendments to your Form ADV; Rule 204-2 requiring the maintenance of true, accurate, and current books and records; and Rule 204-3 requiring the delivery of your written disclosure statement to clients.
 
In order to avoid potential problems down the road and to make sure that everyone has a clear understanding of the new Form ADV Part 2 requirements, your investment advisor should not wait until the end of the year to make the needed revisions. You should take the time now to review and make the necessary updates to your investment advisor’s written policies and procedures.

 

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