With the filing deadline for Form ADV just around the corner for most firms, it's worth revisiting some of the most material amendments to the form as they apply to private equity firms.
If you haven't already begun collecting data for, and actually filling out, your Form ADV, start now. You should have spent the majority of January simply collecting the information necessary to draft your filing. If you haven't done so yet, you have a lot of ground to cover before the March 2018 due date (which is the due date for most advisers).
Fortunately, many of the changes to Form ADV are not drastic, but they are likely to take additional time to implement.
In the majority of cases, private equity fund advisers will be reporting either in a slightly different manner or in greater detail. A best practice for advisers this year, especially with deadlines looming, is to take time with the new version of Form ADV. Spend the extra hours to become as familiar as possible with the new requirements now, and consider who at your firm needs to provide the new data, before deadlines become unmanageable.
Even for Emerging Private Equity Funds, the Amended Form ADV (As of October 1, 2017) Will Require Additional Effort This Year
Some changes, at the very least, will require some private equity firms to reevaluate some practices that were considered outside the purview of Form ADV in prior years. For instance, the now-required reporting of social media sites controlled by a private fund adviser may inspire some firms to reconsider or even limit their social media activities.
You'll need to spend time looking through the social media sites touched by your firm to determine which sites should be reported, and which don't need to be. Does your firm have a Yelp page? Does it have reviews? Does Yelp even count, or does it depend on whether or not your firm has "claimed" the yelp page? You may need to seek third party expertise to help decide.
Other changes are likely to only have a truly significant effect on larger firms. The total number of offices where your firm is providing advisory services must now be disclosed, along with some details concerning the top twenty-five largest offices (a large increase over the previously required five). While this will may be a burden for many larger firms, smaller firms are unlikely to spend much additional time this year on this change (when you only have one office, it makes reporting easier).
Because so many changes, both small and large, have been made to the form, even if you reviewed the new information required back in October, it's a good idea to take another look. The regulators will not be sympathetic toward firms that overlook some of the more minor changes that don't grab headlines
And remember, if ever you need assistance navigating Form ADV and the new changes, the team at Jacko Law Group (JLG) is here to help. We specialize in counsel to small and medium-sized private funds and are happy to assist you through the process of filing your Form ADV this year, along with all of other forms required for private fund advisers.
One of those changes to Form ADV that should be of special focus for private equity firms is the section regarding umbrella registration.
Umbrella Registration - A Streamlined Process
Though the concept of "umbrella registration" is far from new, this altered approach being codified formally under the revised Form ADV will cause many private equity advisers to have to spend additional time on their Form ADV in 2018. Above and beyond the annual update, private equity advisers will be required to complete a brand new Schedule R for each relying adviser.
Essentially, "umbrella registration" allows for a single registration filing for a private equity fund advisory business, but only if specific circumstances exist. If these criteria are satisfied (generally based on the advisor's operations and corporate structure), then "umbrella registration" may be utilized.
Keep in mind that "umbrella registration" has been available since the Securities and Exchange Commission's ("SEC") issuance of a no-action letter on the subject in 2005, which guidance was updated in 2012. .
For many firms, this portion of the Form ADV update is a formalization of the prior no action guidance. Nevertheless, even firms that have been utilizing umbrella registration need still pay close attention to the changes in Form ADV to ensure they remain in compliance.
We specialize in Private Equity Counsel - Robert Conca, our Private Equity expert, has over 18 years of experience advising businesses and financial companies and professionals. If you have any questions about filing Form ADV this year, contact Jacko Law Group, PC today for a consultation.
Robert Conca has over 19 years of experience advising businesses and financial professionals. He has acted both in legal counsel and senior executive capacities for companies spanning all stages of development. From start-ups to ...
Add a comment
- Top 3 Considerations During the Breakaway & Transition Process
- Succession Planning: Identifying a Successor
- California AG Submits Final CCPA Rules for Approval
- ICO To Return $25 Million to Investors
- SEC Charges Morgan Stanley Smith Barney with Providing Misleading Information to Retail Clients
- FINRA’s Senior Help Line: Celebrating 5 Years of Providing Protection
- How To Start: Are You Evaluating Your Firm’s Whistleblower Policies?
- Three Firms’ Failure to Disclose Conflicts of Interest Lead to Almost $1 Million in Disgorgement, Interest
- OCIE Risk Alert—Examinations Focused on Initial Compliance With Regulation Best Interest
- Lone Star Value Management Firm and Founder Pay to Settle SEC Disclosure Charges
- Securities and Exchange Commission (SEC)
- Investment Advisers
- Aging Clients
- Due Diligence
- Transition Services
- Broker Protocol
- Policies and Procedures
- Virtual Currency
- California Consumer Privacy Act (CCPA)
- Dodd-Frank Act
- Advisers Act
- Securities Law
- Office of Compliance Inspections and Examinations (OCIE)
- Ponzi Scheme
- Form U5
- Private Equity
- Private Funds
- Regulation Best Interest
- Hedge Funds
- Regulatory Examinations
- Personally Identifiable Information (PII)
- Government Shutdown
- Risk Alert
- Social Media Marketing
- Exchange-Traded Funds (ETFs)
- Investment Company Act
- Rule 6c
- Wells Fargo