Just when you thought it was safe to go outdoors, the Securities and Exchange Commission strikes again. This time, it wants more information on Form ADV. On May 20, the SEC published Release No. IA-4091 proposing amendments to Form ADV Part 1. The proposed changes would impact the way RIAs report their clients’ assets, and require additional information about firm operations.
SEPARATELY MANAGED ACCOUNTS
The proposed updated Form ADV Part 1 seeks additional information about what the SEC calls separately managed accounts. In common parlance, the term separately managed account or SMA may apply to different types of investment vehicles or platforms. It is therefore critical to note that for the purposes of Form ADV Part 1, the SEC defines an SMA as “advisory accounts other than those that are pooled investment vehicles (i.e., registered investment companies, business development companies and pooled investment vehicles that are not investment companies).”
The proposed amended Form ADV Part 1 Item 5 will require additional information about SMA assets, which the proposed amended form defines as accounts containing regulatory assets under an RIA’s management attributable to the following types of clients:
— Individuals, including HNW
— Banking or thrift institutions
— Pension and profit sharing plans (but not participants or government pensions)
— Charitable organizations
— Corporations or other businesses not listed above
— State or municipal government entities (including government pension plans)