States pushing back ADV-2 deadlines

Although many federally registered advisers were scrambling to meet yesterday's 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 to meet yesterday’s 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.
To read the full version of this story, please see the Monday, April 4 edition of InvestmentNews.