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Financial Advisers Get More Time to Work Up Bios of Staff

January 12, 2011

Advisers have an additional four months to prepare “plain English” brochure supplements about their investment personnel thanks to an extension granted by the Securities and Exchange Commission late last month.

The extension for the supplements—known as ADV Part 2B—gives existing investment advisers with a fiscal year ending Dec. 31 until July 31, 2011 to file the ADV Part2B to new and prospective clients. They have until Sept. 30, 2011, to deliver the documents to existing clients.

New investment advisers registering through April 30 have until May 1 to deliver the brochure supplements to new and prospective clients and they have until July 1 to deliver them to existing clients.

The commission estimates 92 percent of SEC-registered advisers operate on a December fiscal year-end.

The regulator did not extend the compliance date for the ADV Part 2A, which contains information about the advisory firm. Those documents still must be prepared by March 31 for advisers with a fiscal year that corresponds to the calendar year.

Large advisers with many supervisory individuals had asked regulators for additional time to prepare these documents, said Paul Edwards, head securities lawyer with Day Ketterer in Canton, Ohio.

Part of their difficulty has been collecting the education, business background and disciplinary information about all the individuals. The other challenge is figuring out how to present it, Edwards said. The SEC rules allow advisers to include up to five personnel profiles in one brochure or individual documents for each person, he said.

The SEC approved rules in July that require advisers to make the brochures that they give to clients more understandable. Previously, advisers didn’t have to file ADV Part 2 documents with the commission. But they will have to file the new ones electronically as soon as the registration system is able to accept them, Edwards said.   

Filed by Liz Skinner of InvestmentNews, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

 

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