[Federal Register Volume 76, Number 2 (Tuesday, January 4, 2011)]
[Rules and Regulations]
[Pages 255-256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-33142]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 275 and 279
[Release No. IA-3129; File No. S7-10-00]
RIN 3235-AI17
Amendments To Form ADV; Extension of Compliance Date
AGENCY: Securities and Exchange Commission.
ACTION: Final rule; extension of compliance date.
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SUMMARY: The Securities and Exchange Commission is extending the
compliance date for Part 2B of Form ADV, the brochure supplement, and
for certain rule provisions that relate to the delivery of brochure
supplements. The Commission is extending the compliance date generally
for four months to provide certain investment advisers additional time
to design, test and implement systems and controls to satisfy their
obligations to prepare and deliver brochure supplements.
DATES: The effective date for amendments to Part 2 of Form ADV and
related rules under the Advisers Act remains October 12, 2010. The
compliance date for Form ADV, Part 2B and the provisions of rule 204-3
concerning the delivery of brochure supplements is extended generally
for four months as described in the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Vivien Liu, Senior Counsel, or Daniel
Kahl, Branch Chief, at (202) 551-6787 or [email protected], Office of
Investment Adviser Regulation, Division of Investment Management, U.S.
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-8549.
SUPPLEMENTARY INFORMATION: On July 28, 2010, the Commission adopted
amendments to Part 2 of Form ADV [17 CFR 279.1], and related rules
under the Investment Advisers Act of 1940 [15 U.S.C. 80b] (``Advisers
Act''),\1\ to require registered investment advisers to provide clients
with a brochure and brochure supplements written in plain English
(``Adopting Release'').\2\ The brochure contains information about the
advisory firm, whereas the brochure supplement contains information
about the advisory personnel on whom clients rely for investment
advice.
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\1\ See e.g., rule 204-3 [17 CFR 275.204-3], which requires
registered advisers to deliver brochures and brochure supplements.
\2\ Amendments to Form ADV, Investment Advisers Act Rel. No.
3060 (July 28, 2010) [75 FR 49234 (Aug. 12, 2010)].
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When we adopted amendments to Form ADV last July, we established
two separate compliance dates for delivering brochure supplements. New
investment adviser registrants, i.e., those that apply for registration
on or after January 1, 2011, would begin providing brochure supplements
to clients upon registering. Existing investment adviser registrants
would provide brochure supplements to new and prospective clients upon
filing their annual updating amendment to
[[Page 256]]
Form ADV for fiscal year ends beginning on December 31, 2010, and to
existing clients within 60 days of filing the annual updating
amendment. Most registered advisers have fiscal years ending on
December 31 and must, as a result, file an annual updating amendment by
March 31, 2011.\3\ Absent an extension of the compliance date, these
advisers would be required to deliver their first brochure supplements
to new and prospective clients no later than March 31, 2011 and to
existing clients no later than May 31, 2011.
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\3\ Based on Investment Adviser Registration Depository data as
of December 1, 2010, 92% of SEC-registered investment advisers
report a December fiscal year end.
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We have received correspondence from the Securities Industry and
Financial Markets Association (``SIFMA''), requesting that we delay the
compliance date for at least an additional four months, until July 31,
2011, solely with respect to requirements regarding delivery of the
brochure supplement.\4\ SIFMA asserts that preparing and disseminating
brochures with respect to thousands of supervised persons to tens of
thousands of clients presents its members with substantial logistical
challenges in meeting the compliance date. It asserts that its members
need additional time to design, test and implement systems and controls
that will assure that each client receives an accurate brochure
supplement with respect to the supervised person who provides advice to
that client.
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\4\ Memorandum from Morgan Lewis on behalf of certain SIFMA
member firms dated Dec. 16, 2010 available at http://www.sec.gov/rules/proposed/s71000.shtml.
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Based on the concerns expressed in the correspondence, and in light
of similar concerns that have been expressed by other investment
advisers to our staff, we are persuaded that a limited extension of the
compliance date for the delivery of brochure supplements for existing
registered advisers is appropriate.\5\ We have based this decision on
the information SIFMA has provided and our experience in overseeing the
industry. In addition, to provide consistent treatment for newly
registering advisers, we are also persuaded that the limited extension
of the compliance date for the delivery of brochure supplements is
appropriate for these advisers as well. We are not extending the
compliance date for the filing and delivery of the brochure required by
Part 2A of Form ADV and related rules under the Advisers Act, which is
required for newly registering investment advisers beginning on January
1, 2011, and for existing registered advisers when they file their
annual updating amendments for fiscal years ending on and after
December 31, 2010.
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\5\ The North American Securities Administrators Association has
recommended that the State securities authorities provide the same
extension for State-registered investment advisers. However, State-
registered advisers should contact the States where they are
registered to confirm compliance dates.
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Accordingly, the Commission believes it is appropriate to modify
and extend the compliance date for brochure supplements for the
following investment advisers: \6\
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\6\ Advisers may choose to deliver brochure supplements earlier
than the dates outlined in this release.
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Existing Registered Investment Advisers. All investment advisers
registered with the Commission as of December 31, 2010, and having a
fiscal year ending on December 31, 2010 through April 30, 2011, have
until July 31, 2011, to begin delivering brochure supplements to new
and prospective clients. These advisers have until September 30, 2011
to deliver brochure supplements to existing clients. The compliance
dates for delivering brochure supplements for existing registered
investment advisers with fiscal years ending after April 30, 2011
remain unchanged.
Newly-registered Investment Advisers. All newly registered
investment advisers filing their applications for registration from
January 1, 2011 through April 30, 2011, have until May 1, 2011 to begin
delivering brochure supplements to new and prospective clients. These
advisers have until July 1, 2011 to deliver brochure supplements to
existing clients. The compliance dates for delivering brochure
supplements for newly-registered investment advisers filing
applications for registration after April 30, 2011 remain unchanged.
The Commission finds that, for good cause and the reasons cited
above, including the brief length of the extension we are granting,
notice and solicitation of comment regarding the extension of the
compliance date for Part 2B of Form ADV and the provisions of rule 204-
3 that relate to the delivery of brochure supplements are
impracticable, unnecessary, or contrary to the public interest.\7\ In
this regard, the Commission also notes that investment advisers need to
be informed as soon as possible of the extension and its length in
order to plan and adjust their implementation process accordingly.
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\7\ See Section 553(b)(3)(B) of the Administrative Procedure Act
(5 U.S.C. 553(b)(3)(B)) (``APA'') (an agency may dispense with prior
notice and comment when it finds, for good cause, that notice and
comment are ``impracticable, unnecessary, or contrary to the public
interest''). This finding also satisfies the requirements of 5
U.S.C. 808(2), allowing the rules to become effective
notwithstanding the requirement of 5 U.S.C. 801 (if a Federal agency
finds that notice and public comment are ``impractical, unnecessary
or contrary to the public interest,'' a rule ``shall take effect at
such time as the Federal agency promulgating the rule determines'').
Also, because the Regulatory Flexibility Act (5 U.S.C. 601-612) only
requires agencies to prepare analyses when the Administrative
Procedures Act requires general notice of rulemaking, that Act does
not apply to the actions that we are taking in this release. The
change to the compliance date is effective upon publication in the
Federal Register. This date is less than 30 days after publication
in the Federal Register, in accordance with the APA, which allows
effectiveness in less than 30 days after publication for ``a
substantive rule which grants or recognizes an exemption or relieves
a restriction.'' See 5 U.S.C. 553(d)(1).
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Dated: December 28, 2010.
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-33142 Filed 1-3-11; 8:45 am]
BILLING CODE 8011-01-P