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Brent Everett

Dodd-Frank And The New Form ADV Part 2

Posted by Brent Everett
Brent Everett
Brent Everett founded Profisys, LLC, a fee-only Registered Investment Advisor, in 1998. While acting as Manag...
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on Tuesday, March 29, 2011 in Unconventional Wisdom · 2 Comments

The United States Securities and Exchange Commission (SEC) requires each investment advisor that is currently registered to file a revised Form ADV Part 2 that meets the new requirements adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act within 90 days after the end of the investment advisor's fiscal year.  For the vast majority of advisors, that means that the new version of this form has to be filed by March 31, 2011.

We are already hearing that a number of advisors
 will not meet the deadline.  This is not really surprising, considering the amount of time that is required to produce this filing (just the SEC document explaining how it should be written in "plain English" is 75 pages long).  According to the SEC's estimate, it takes a small advisory firm about 60 hours to complete this filing and it could take well over a thousand hours for a very large firm.  We have also received correspondence from some of the major compliance consulting firms indicating that they have been unable to accept any additional engagements for the past couple of months as advisors have rushed to seek assistance in preparing the required filing.  The consequences of missing the filing deadline are potentially severe, ranging from a warning or a fine up to revocation of the firm's registration.

We have always maintained an internal compliance program and do not rely on outsourcing our compliance duties.  We believe that it is important to demonstrate that we maintain strong compliance controls and prefer not to incur additional costs in outsourcing the work that would have to be passed along to our clients in the form of higher advisory fees.  Our Form ADV Part 2A is posted on our website's home page and is also accessible from the SEC's public disclosure website.  It contains a lot of new information about our firm and we hope that you take the time to read it.  If you're one of our clients, you'll be receiving a "Summary of Material Changes" next month, which is also a new SEC requirement.  If you have any questions about the content, please contact your advisor to discuss it.  If you have questions about Chris Dodd or Barney Frank, we can't help you with that.  We do, too.

Tags: dodd-frank, form adv, sec
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