Some states give a break on the deadline for filing ADVs
Although many federally registered advisers were scrambling last week to meet the March 31 filing date for the new ADV Part 2 forms, state-registered advisers in several states, including Michigan, Pennsylvania and Texas, were enjoying a bit of a reprieve
Although many federally registered advisers were scrambling last week to meet the March 31 filing date for the new ADV Part 2 forms, state-registered advisers in several states, including Michigan, Pennsylvania and Texas, were enjoying a bit of a reprieve.
Indeed, a handful of states have extended the deadline for filing the new narrative ADV form by anywhere from a month to a year.
As a result, officials in states with extended deadlines expect that most financial advisers registered in their states will file on time.
This stands in stark contrast to what is going on at the Securities and Exchange Commission. Consultants estimate that up to a third of the advisers who are registered with the SEC may have missed the March 31 deadline, which applies to registered investment adviser firms with fiscal years ending Dec. 31.
“Each state had the option of following the SEC’s deadline or adopting their own,” said Shonita Bossier, director of Kentucky’s securities division. “We adopted our own due date.”
The Bluegrass State’s revised deadline is July 1.
The 100 advisory firms domiciled in Kentucky needed the extra time, Ms. Bossier said.
“They really were concerned about the new brochure format,” she said.
Along with differing filing deadlines, the new form “seemed very confusing to us,” said Paul M. “Mick” Schwartz, director of licensing in Pennsylvania, which licenses about 550 advisers. “So we said, “Let’s do Sept. 30 [as a deadline]’ to give plenty of time to do this.”
Past experience with implementing new forms and filing systems shows that “everybody doesn’t make [the deadline],” Mr. Schwartz said.
The new ADV “was rolled out pretty quickly [and it] takes time to get comfortable with the document,” said David Swafford, an examiner in Colorado’s investment adviser unit, which regulates about 700 advisory firms.
Colorado is giving advisers until June 30 to file the new forms.
“Based on the number of phone calls — in the last few weeks, especially — there’s been a lot of trepidation” about the new form, Mr. Swafford said.
Ms. Bossier expects that most of the state’s advisers will meet the July 1 deadline. Likewise, Mr. Schwartz and Mr. Swafford think that advisers in their states will file in time.
Although the state’s largesse no doubt is welcome by advisers, some observers don’t think that the extended deadlines will be much of an advantage.
For one thing, advisers who are registered in multiple states will have to meet the earliest deadlines of the bunch.
What’s more, “states, unlike the SEC, tend to read these things,” Scott Gottlieb, chief executive of U.S. Compliance Consultants LLC, said about the ADV forms.
MULTIPLE COMMENTS
He said that he has received multiple comments from state officials on ADVs he has filed.
“Not one or two comments but 11 or 12,” Mr. Gottlieb said. Thus, filing the form doesn’t necessarily mean that advisers will be done with it.
Federally registered advisers had until last Thursday to file their new ADV forms.
Some of those advisers waited until the very end to file their updated disclosure documents because they didn’t want to share this sensitive business information until absolutely necessary, consultants said.
“There’s sensitivity among these advisers about being the first to share their information about their business, their fees and any potential conflicts,” said Barry Schwartz, partner at ACA Compliance Group LLC. “Everyone is looking to show their cards last.”
Firms will be able to review one another’s methodologies and strategies, as well as see what their competitors are charging, said Ken Kaltman, chief operating officer at National Compliance Services Inc.
SEC-registered advisers who had to file ADVs by this March must send the new ADV Part 2A, or the so-called “brochure,” to existing clients by May 30, said Nancy Lininger, a Camarillo, Calif.-based compliance consultant.
Prospective clients must get the new Part 2A information once the form is filed.
SEC-registered advisers with fiscal years ending Dec. 31, 2010, through April 30 have until July 31 of this year to deliver their ADV Part 2B’s, known as brochure supplements, to new clients. They have until Sept. 30 to deliver the supplements to existing clients.
Liz Skinner contributed to this story.
E-mail Dan Jamieson at [email protected].
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