Registered investment advisers to private funds clients are required to make filings with the Securities and Exchange Commission (SEC) each year and deliver certain information to their clients. In particular, registered investment advisers must:
- File their annual amendment to Form ADV by March 31, 2023 (if their fiscal year end is December 31).
- Deliver their brochure (or Form ADV Part 2) to their clients by April 30, 2023.
- If using client audited financial statements to comply with the custody rule, deliver such financial statements to clients by April 30, 2023.
- File Form PF either by April 30, 2023, or, if the investment adviser is a "large hedge fund adviser," 60 days after the end of each quarter.1
- Deliver their privacy notices if they share information or have changed their policies, such as due to changes to state law.2
- Review the adequacy and effectiveness of their compliance policies no less frequently than annually.
- Review and collect trade reports on at least a quarterly basis3 and holdings reports on at least an annual basis from "access persons."
- Confirm that their personnel are not subject to any new disciplinary events that would need to be reported in Form ADV.4
Deadlines of April 30, 2023 will fall on a weekend and will not roll to the next business day, so if investment advisers wish to satisfy the obligations on a business day, they should plan on satisfying the delivery or filing obligation on April 28, 2023.5
Advisers to funds also have to consider whether they need to obtain the below on at least an annual basis, irrespective of their registered status:
- If the fund may invest in "new issues," confirmation that no change in status has occurred for restricted or covered person status of investors.
- Confirmation from officers, compensated solicitors (regarding themselves and certain of their directors and officers) and, if the fund offers voting securities, certain large beneficial owners of the fund's securities that they have not been convicted of certain crimes, found to have engaged in certain disqualifying conduct and are not subject to any bars, limitations or revocations of licenses set forth in paragraph (d) of Rule 506 that would prevent the fund from using Rule 506 for its offering of securities.
- If the fund is continuing to offer its securities on the anniversary of its previous filing of its Form D, an annual amendment to its Form D to update information relating to the offering. Amendments are also required for other material changes if the fund is still offering.
In addition, investment managers to funds investing in securities should consider if they have to file: 6
- Form 13F, by 45 days after the end of each quarter (including by February 14, 2023) if the manager has investment discretion over more than $100 million of 13(f) securities (securities included on the 13(f) list available here). Note that Form 13F was slightly amended for 2023.7
- Schedule 13G and amendments thereto or, for investment managers that acquired or hold the securities for the purpose of or with the effect of changing or influencing control of the issuer, Schedule 13D. Registered investment advisers and their control persons that beneficially own more than 5 percent but less than 10 percent of a registered class of equity securities as of the last day of the year are currently required to file an initial Schedule 13G and an amendment to reflect changes in the information reported within 45 days after the end of the calendar year, i.e., February 14, 2023.8
- Form 13H, for persons that have investment discretion over accounts and have effected transactions of (i) two million shares, or $20 million in fair market value in National Market System (NMS) securities (exchange-listed securities no matter where traded) during a calendar day; or (ii) 20 million shares, or $200 million in fair market value in NMS securities during a calendar month, a Form 13H filing is due promptly upon crossing the threshold, and amendments are due promptly at the end of each quarter if there are any changes and within 45 days of the end of year if the filer does not have any changes to its previously reported information as of the end of the year.
- Form 3 or 4 if the investment manager's clients beneficially own more than 10 percent of a class of equity securities registered under the Exchange Act, are a director of the issuer or have a director representative on the issuer's board of directors
- BE-12 by May 31, 2023 for U.S. entities with voting securities that are more than 10 percent owned by a foreign person at the end of the calendar year.
- Form SLT by the 23rd of each month for any U.S. person, when consolidated with any U.S. parts of its organization and any U.S. persons that it advises, that has $1 billion in (i) foreign long-term securities (including equity securities) that it owns, (ii) foreign long-term securities that it holds for others and (iii) long-term securities that it has issued to "foreign" persons. Note that Form SLT is subject to changes effective starting in November of 2022.9
Finally, the SEC adopted changes to its forms that will become effective in 2023, including:
- Form 4 and Form 5
- Effective on February 27, 2023, persons disposing of securities through bona fide gifts will be required to report them on Form 4 within 2 business days instead of on a Form 5.
- Effective on April 1, 2023, Form 4 will include a checkbox to indicate that the transaction is made pursuant to a 10b5-1 plan and the date that the selling insider adopted the Rule 10b5-1 plan.10
- Form 144
- Effective on April 13, 2023, Form 144 will be amended so that it must be filed on EDGAR.11
- Rule 10b5-1 Additional Conditions:
- Effective on February 27, 2023, persons using trading plans for an affirmative defense from insider trading liability would be required to comply with additional conditions under Rule 10b5-1.12
- Form N-PX
- All "institutional investment managers" that are required to file a Form 13F and exercise voting power over Say-on-Pay and Say-on-Frequency votes to file a Form N-PX no later than August 31, 2024 for the year beginning July 1, 2023 to June 30, 2024. Subject institutional investment advisers will need to retain records for such votes starting on July 1, 2023.13
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1. "Large liquidity fund advisers" are not addressed in this alert or in the calendar, but are required to file a Form PF amendment within 15 days of the end of the relevant quarter.
2. Note that changes to California privacy law will require most investment advisers to funds with investors from California to update their privacy policies in 2023.
3. We recommend collecting trading on a more frequent basis to facilitate more prompt policing of trades versus the clients' trading.
4. Advisers should also consider whether the questionnaire should request information regarding potential disqualifications under Rule 506(d) under the Securities Act, Section 8(a) of the Commodity Exchange Act and Rule 206(4)-1 under the Advisers Act.
5. Pursuant to Rule 0-4 under the Investment Advisers Act of 1940, as amended, filings are required on a weekend or holiday unless the Investment Advisor Registration Depository (IARD) system is not available.
6. See below "List of Floating Compliance Dates" and "List of Forms Without Fixed Filing Dates" for further details on each filing.
7. Form 13F will now (i) require reporting of the Central Registration Depositary (CRD) number and SEC File No. of the filer and any other manager for which the filing is made, (ii) permit the filer to report the Financial Instrument Global Identifier for each issuer and (iii) require the dollar value of positions to be presented to the nearest dollar (instead of rounding it to the nearest thousand)
8. Other beneficial owners are required to file their initial Schedule 13G within 10 calendar days. The SEC has proposed changes to the timing of 13G filings.
9. Form SLT will now require the disclosure of (i) changes in fair value and (ii) purchases and sales information. See the adopting release available at 86 Fed. Reg. 29628 (Jun. 2, 2021) available here and the 2022 instructions available here
10. Note that Rule 10b5-1 plans will now be subject to additional conditions, such as cooling-off periods and limitations on the number and type of plans.
12 See here for further information.
13 See here.
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.