Currently pending amendments to Form ADV have a compliance date of October 1, 2017 and, as of that date, an adviser filing an initial Form ADV or an amendment to an existing Form ADV must use the revised Form ADV. In an August 2017 “Information Update,” the staff of the Division of Investment Management gave some breathing room to advisers who don’t have enough information to respond to new questions required by recent amendments to Form ADV. The guidance applies to any investment adviser that must make an “other-than-annual” amendment to its Form ADV between October 1, 2017 and the date of its next annual amendment to Form ADV.
The staff acknowledged industry concerns that some of the information required to respond to new or amended questions in Form ADV Item 5 and related Schedule D may not be readily available, since such information was previously not required. In particular, existing systems may not have captured data necessary to provide an adviser’s regulatory assets under management and borrowings in its separately managed accounts that correspond to ranges of gross notional exposure as of the end of its last fiscal year.
The staff noted that the IARD system, through which Form ADV must be filed, does not allow forms to be filed without completing all applicable fields.
The Division of Investment Management staff said that, in these circumstances, it will not recommend enforcement action if an adviser does not have enough data to provide a complete response to a new or amended question in Item 5 or the Schedule D sections related to Item 5 during the period from October 1, 2017 to the date of its next annual amendment to Form ADV. Instead, an adviser should respond “0” as a placeholder in order to submit its Form ADV on the IARD system and should include a corresponding note in the “Miscellaneous” section of Schedule D reflecting that a placeholder value of “0” was entered.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.