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Regulation and Compliance > Federal Regulation > SEC

SEC OKs Revised Advisor Form

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Members of the U.S. Securities and Exchange Commission voted unanimously Wednesday to change the official “brochure” that SEC-registered investment advisors must give to clients and prospects.

The document–Form ADV, Part 2 –gives an investor information about an investment advisor’s qualifications, investment strategies and business practices.

The current version of the brochure requires advisors to answer multiple-choice and fill-in-the-blank questions organized in a “check-the-box” format.

The amendments adopted by the SEC will require advisors to give more information about compensation and potential conflicts of interest, and firms will start using resume-like brochure “supplements” to tell clients about the individuals who will be serving them, officials say.

The SEC plans to post the brochures on its website.

The SEC says it will delay publication of the revised brochure for 5 business days to work with the states to accommodate state-specific changes in form items and instructions. The SEC hopes to publish the new version of Form ADV, Part 2 as a uniform SEC-state form.

The SEC says the amended rules and forms will be effective 60 days after publication in the Federal Register. Most investment advisors will begin distributing and publicly posting new brochures in the first quarter of 2011.


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