Form ADV, Part 2, is used as an investment adviser’s disclosure document (or brochure), which must be provided to investment advisory clients. As you know, the SEC has changed the old form, which was in a check-the-box format with some narrative explanation, to a new form, which is entirely narrative. The SEC also now requires that an adviser electronically file its Form ADV, Part 2, with the SEC, making it available for viewing by the public.
However, many investment advisers do not register with the SEC. Generally, if an investment adviser has less than $25,000,000 of assets under management (or less than $100,000,000 of assets under management after July 20, 2011), then the adviser must register with one or more state securities regulators.
When registering with the South Carolina Securities Division, an adviser also must submit Form ADV, Part 2. The Securities Division has issued guidance on its requirements regarding Form ADV, Part 2. First, as of January 1, 2011, the Securities Division requires the new Form ADV, Part 2, to be submitted as part of any initial application for registration as an investment adviser in South Carolina. Second, as of January 1, 2011, all investment advisers who are already registered in South Carolina must include the new Form ADV, Part 2, as part of the adviser’s next annual updating amendment (or as part of any amendment to Form ADV). Therefore, advisers with a December 31 year-end must file the new Form ADV, Part 2, at least by March 31, 2011. Finally, the Securities Division encourages advisers to follow the distribution and delivery schedule of the new Form ADV, Part 2, as provided in the instructions to that new form.
If filing electronically through the IARD, an adviser must also file the new Form ADV, Part 2, electronically. It will then become available for viewing by the public. Since South Carolina allows filing an application for registration as an adviser by paper (i.e., not electronically, but by filing the documents directly with the Securities Division), a paper-filer presumably would file the new Form ADV, Part 2, directly to the Securities Division.
