K.(2) on the use of borrowing and derivatives in such SMAs.
More specifically, investment advisers with RAUM attributable to SMAs of: Investment advisers may, but are not required to, limit their reporting to individual accounts of at least million. K.(3) requires investment advisers to (i) identify any custodian that accounts for at least 10 percent (10%) of total RAUM attributable to such investment adviser’s SMAs and such custodian’s office location and (ii) disclose the amount of RAUM held at each such custodian.
Investment advisers with less than billion in RAUM attributable to SMAs will be required to report this information only as of year-end.
The Amendments require investment advisers with at least 0 million in RAUM attributable to SMAs to report information in Item 5.
Additionally, the Amendments include a revision to Rule 204-2 of the Advisers Act (relating to recordkeeping), requiring investment advisers to maintain additional records of performance calculations and performance-related communications.
The Amendments will be effective 60 days after publication in the Federal Register, and investment advisers will need to comply with the Amendments on October 1, 2017.
The Amendments require increased information concerning SMAs by adding specific questions in Item 5 of Form ADV with respect to (a) the type of asset(s) held by the SMAs; (b) the use of derivatives and borrowing; and (c) the role of custodians. The SEC declined to provide definitions of these terms in Form ADV and instead, permits investment advisers to use their own methodologies in determining appropriate asset categories.
The amount of information requested varies based upon an investment adviser’s total regulatory assets under management (“ The Amendments require investment advisers to report the approximate percentage of their SMA assets invested in twelve broad asset categories: exchange-traded equity securities; non-exchange traded equity securities; U. Investment advisers with at least billion in RAUM attributable to SMAs will be required to report this information as of two dates per year (mid-year and year-end).
1 “Amendments to Form ADV and Investment Advisers Act Rules,” Investment Advisers Act Release No. 2 We note that the SEC did not specifically address “funds of one” in the Adopting Release.Schedule R must be filed for each Relying Adviser and would consolidate in one location important information about each Relying Adviser, including identifying information (Section 1); the basis for SEC registration (Section 2); form of organization (Section 3); and control persons and information regarding the Relying Adviser’s owners and executive officers (Section 4).Additionally, a Filing Adviser must distinguish whether it or any of its Relying Advisers manage or sponsor the private funds that are reported in Section 7. The Amendments revise the instructions to Form ADV to clarify that all information in Form ADV should be answered on behalf of the Filing Adviser and each Relying Adviser, unless otherwise indicated. However, the Adopting Release clarified that neither of (i) an investment adviser’s employees’ social media accounts, nor (ii) the social media account of an investment adviser’s unregistered affiliate that is used solely to promote the business of such affiliate, are required to be disclosed. F, which previously requested general information about an adviser’s principal office and place of business, now requires advisers to provide the total number of offices in which they conduct business as well as information about their 25 largest offices, based on the number of personnel.The Amendments modify Rule 204-2(a)(16) of the Advisers Act to provide for the retention of all communications (whether distributed directly or indirectly) to any person demonstrating calculation of performance or rate of return.Prior to the effectiveness of the Amendments, investment advisers were only required to maintain records supporting performance claims that were distributed to 10 or more persons.