The Securities and Exchange Commission adopted final amendments Thursday requiring advisors to disclose more information on Forms ADV about their use of separately managed accounts, branch office operations and social media.
The amendments also incorporate a method for private fund advisor entities operating a single advisory business to register using a single Form ADV.
The new rules take effect Oct. 1, 2017.
“Requiring investment advisors to report this additional information will provide investors and the Commission with a better understanding of the risk profile of each advisor and the industry as a whole,” said SEC Chairwoman Mary Jo White, in a statement.
Advisors will have to provide aggregate data about their separate account use related to the use of borrowings and derivatives.
Karen Barr, president and CEO of the Investment Adviser Association, said the final rule includes changes recommended by IAA to raise the threshold from $150 million to $500 million in separately managed accounts for advisors to report clients’ use of derivatives. This change “will alleviate the burden on thousands of smaller advisors while still allowing the SEC to meet its regulatory objectives,” Barr said.
Barr also said the one-year compliance date “should provide firms with necessary time to develop the collection and reporting of new data to the SEC.”