The staff of the Securities and Exchange Commission's (SEC) Division of Investment Management (Staff) recently supplemented its "Frequently Asked Questions on Form ADV and IARD" (FAQ) webpage to provide additional guidance for exempt reporting advisers (ERAs) under section 203(l) and 203(m) of the Investment Advisers Act . The new FAQ addresses reporting by an ERA on Form ADV on behalf of special purpose entities (SPEs) that oversee an ERA's investment advisory services.
The FAQ explains that an SPE may satisfy its reporting
obligation under section 203(l) or 203(m) by including all
information concerning the SPE on an ERA's Form ADV report,
provided that the SPE:
(i) does not exercise discretionary authority over a fund's
assets other than the hiring or firing of the adviser to the fund
and does not engage in any other activities that would cause the
SPE to be an investment adviser as defined in section 202(a)(11);
and (ii) acts as the SPE only for private funds or other pooled
investment vehicles advised by the relevant ERA or its related
persons (as defined in the Glossary to Form ADV).
If an ERA decides to include SPEs on its Form ADV, the report must include all of the information that would have been included if each SPE filed a separate report on Form ADV. Therefore, the ERA must: (i) include executive officer and ownership information of each SPE on Schedules A and B and identify to which SPE each officer or owner relates by identifying the relevant SPE in the "Title or Status" column of Schedule A; and (ii) respond to the questions in Form ADV such that all responses take into account relevant information about the ERA itself and all SPEs included in the Form ADV.
ERAs may wish to follow this guidance in completing their Form ADV. ERAs must file Form ADV on or before March 30, 2012.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
