Considerations Presented By Amended Form ADV Effective October 1, 2017

August 25, 2017

As a reminder, an investment adviser registered or required to be registered with the SEC (each, an “Adviser”) filing an initial Form ADV or an amendment to an existing Form ADV on or after October 1, 2017, will be required to use an amended Form ADV (the “Amended Form”), as further described in our Memorandum entitled “SEC Adopts Rules to Enhance Information Reported by Investment Advisers.” In anticipation of the effective date, highlighted below are certain considerations presented by the Amended Form:

Private Fund Identification Number

If an Adviser forms a private fund on or after October 1, 2017, and the Adviser is required to file a quarterly update on Form PF prior to its next annual amendment of Form ADV, the Adviser would need to file an other-than-annual amendment of Form ADV in order to obtain a private fund identification number for Form PF reporting purposes, thereby triggering the additional information required by the Amended Form.

The SEC Division of Investment Management recently issued an Information Update1 stating that if an Adviser is required to file an other-than-annual amendment to its Form ADV on or after October 1, 2017, but before its next annual amendment to the form, and it does not have enough data to provide a complete response to a new or amended question in Item 5 or its related sections under Schedule D,2 the Adviser can respond “0” as a placeholder in order to submit the form. Advisers that take this approach should add a corresponding note in the Miscellaneous section of Schedule D to identify that a placeholder value of “0” was entered.

Umbrella Registration

Subject to certain conditions, the Amended Form facilitates an “umbrella registration” on a single Form ADV for a filing adviser and one or more relying advisers operating a single advisory business.

Instructions to the Amended Form provide that umbrella registration is not available if (i) the filing adviser does not have its principal office and place of business in the United States, (ii) the filing adviser or a relying adviser does not manage a private fund or (iii) the filing adviser or a relying adviser is an exempt reporting adviser.

Consequently, to the extent that umbrella registration is no longer available to Advisers that previously relied on the registration of a single filing adviser, those relying advisers must be separately registered with the SEC by the time of the filing adviser’s next annual amendment of Form ADV (i.e., within 90 days after the end of the filing adviser’s fiscal year).

Separately Managed Account Assets

The Amended Form requires an Adviser to report certain information regarding its regulatory assets under management (“RAUM”) attributable to separately managed account clients, which is calculated by taking the Adviser’s total RAUM and subtracting the RAUM attributable to (i) investment companies, (ii) business development companies, and (iii) pooled investment vehicles, which include but are not limited to private funds.

Advisers must therefore determine whether certain entities, such as single-investor funds or “funds of one,” should be treated as pooled investment vehicles. According to the Amended Form, if an Adviser has reported an investment vehicle on Form PF as a parallel managed account, the RAUM attributable to that investment vehicle must be reported as separately managed account assets on Form ADV.

The Amended Form also requires Advisers to indicate the percentage of separately managed account assets attributable to various asset types. Further, Advisers must report their separately managed account assets associated with three levels of gross notional exposure as well as the dollar amount of borrowings and aggregate exposures to various derivatives. Advisers should become familiar with the additional information related to separately managed account assets required by the Amended Form.

S&K Observations

We recommend that Advisers consider these and other issues raised by the Amended Form in anticipation of the effective date. Subscribers to Seward & Kissel’s online compliance subscription service can access our updated “Guide to Completing Form ADV Part 1A” and “Worksheet for Completing October 1, 2017 Revisions to Form ADVhere.


1 See SEC Division of Investment Management’s Information Update entitled “Information Update for Advisers Filing Certain Form ADV Amendments” dated August 2017.

2 For example, an Adviser filing an other-than-annual amendment can respond “0” as a placeholder if the Adviser’s books and records did not capture the data necessary to respond to new Schedule D, Section 5.K.(2), which asks for the amount of regulatory assets under management and borrowings in the Adviser’s separately managed accounts that correspond to a range of gross notional exposures as of the end of the Adviser’s fiscal year.


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Compliance, Investment Advisers