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US SEC building in Washington, D.C., 2008 Chip Somodevilla/Getty Images
US SEC building in Washington, D.C., 2008

SEC Postpones Deadline for Form ADV Submission

The SEC will give advisors an extra month to file their Form ADV, both parts 1 and 2, in light of the business disruptions caused by the coronavirus pandemic, and left open the possibility of further postponement.

Financial advisors will have a delay of one month, until April 30, to submit both Parts 1 and 2 of their Form ADVs to the SEC, the agency announced Friday. The delay is an additional sign of how the coronavirus is affecting the policies and agencies tasked with regulating the financial services space.

“The disease has led to disruptions to transportation, including buses, subways, trains and airplanes and the imposition of quarantines around the world, which may limit investment advisers’ access to facilities, personnel, and third party service providers,” the SEC order read. “In light of the current situation, we are issuing this Order providing a temporary exemption from certain requirements of the Advisers Act.”

According to the Investment Advisers Act of 1940, RIAs must submit a Form ADV to the SEC and state securities authorities that details the advisor’s “business, ownership, clients, employees, business practices, affiliations and any disciplinary events” that pertain to a firm’s advisors or employees; Part 2 was established in 2011 and mandates that firms prepare narrative brochures for clients detailing business practices and conflicts.

Form ADV Part 3, which is more commonly known as the Form CRS, is a newly established mandate and must be submitted on June 30, the same day that Regulation Best Interest is implemented.

While the original deadline for submitting the Forms ADV to the SEC was March 30, the new order grants firms until the end of April, with the caveat that the Commission could extend the delay further, and even issue other relief for firms as needed. SEC Chairman Jay Clayton said Friday that the Commission was “monitoring closely” the impact the virus’ spread would have on investors.

“Today’s targeted relief will provide additional time so affected funds and advisers can continue meeting the expectations of their investors and clients,” Clayton said.

The order also delays submission for the Form PF, which private fund advisors or RIAs who manage at least one private fund and collectively total more than $150 million in private fund assets under management must submit to the SEC.

If a firm believes there will be a delay in submitting their Form ADV and are relying on the order to get a delay, firms will need to send the Commission a “brief description” as to why it couldn’t submit the form on time, and the estimated date when they think they’ll be able to deliver the form, via email to [email protected]. Additionally, firms will be required to post their reasoning on their public website or otherwise inform clients. 

Finally, firms have no longer than 45 days after the form’s original due date of March 30 to deliver their forms to the SEC, according to the order.

Tara Unverzagt, the founder of South Bay Financial Partners in Torrance, Calif., said the firm had already submitted their Form ADV, as they always target Feb. 28.

“And even if we hadn’t, nothing changed for us. I would guess it depends on if you are a solo or a multi-person company,” she said. “I don’t see why COVID-19 would affect a solo firm. If you are a multi-person firm, if you weren’t virtual before, you’re probably struggling now."

The majority of the SEC staff is currently teleworking, according to the commission; last week, the majority of staff in the SEC's D.C. headquarters was ordered to work remotely as an employee underwent testing for the coronavirus.

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