The Securities and Exchange Commission is mulling requiring advisors to include more information about their practices — like separately managed accounts — in their Form ADV to help the agency determine which firms to examine, David Grim, acting director of the agency’s Division of Investment Management, said Friday.
The IM division has been reviewing the types of information filed by investment advisors on Form ADV and Form PF regarding private fund advisors and “considering whether there is additional information that would be useful for risk assessment purposes,” Grim told compliance officers at the Investment Adviser Association’s compliance conference in Arlington, Virginia, just outside Washington.
Karen Barr, president and CEO of IAA, says IAA foresees “a number of significant changes coming to Form ADV.”
While SEC staff has been working on changes to make the form work better for private fund advisors, more recently, Barr says, the SEC ”may be exploring whether to add information about use of leverage and securities lending,” and “may also be considering whether to require advisors to break down various answers based on type of account (pooled vehicles vs. separate account).”
IAA, Barr says, has also asked SEC staff to consider “clarifying some of the confusing questions in the custody section” of Form ADV.
The SEC told lawmakers last August that the agency is using the information it has gleaned from Form PF in its examinations and enforcement efforts regarding private fund advisors, including hedge funds, and plans to “enhance” how it uses the data.