IAA - 204-2 Books & Records, Amendments to applications, & delivery of brochure & supplements

When must you provide an updated disclosure?

1. 120 days after fiscal year 2. when IA has had a disciplinary event or material change in item 9

What are the requirements for Part 2A Brochure?

1. clearly written disclosure in plain English about IA's practice, conflicts of interest, and advisory personnel. 2a Brochure summary of business 2B Brochure Supplement describing personnel on whom rely on personal advice. Only the top 5 persons. This document is not publicly available. Attached to ADV Part 1

Who must receive a Brochure Supplement?

1. initial client receives advisory services. 2. an updated brochure suppl when a disciplinary event has happened Do not need to provide to 1. clients who receive impersonal advice 2. qualified clients who are officers, directors, and employees.

What type of records should be maintained for client disclosures brochures?

1. maintain a copy of the annual offer or delivery letter and a list of clients it was mailed to/ 2. copy of complete ADV and any amendments 3. client requests for ADV Part 2 and the firm response 4. maintain client acknowledgement.

What are the record requirements for the brochure supplement?

1. maintained in the client's file and dates copies provided. This is the only proof and IA has that client was provided with proper disclosures. 2. Proof of copy needs to be maintained only when a prospective client is solicited by an outside solicitor. or the cash solicitation rule.

How many types of categories of records must a IA keep for recordkeeping requirements?

1. organizational records 2. accounting records 3. portfolio management records 4. business agreements or arrangements 5. client relationship materials 6. advisers with custody of client assets 7. marketing records 8. Code of Ethics and personal transactions 9. Compliance programs 10. political contributions 11. electronic records 12. misc records & other general info

Why does the SEC ask for electronic email communication?

1. to assess an adviser's compliance with the information & record keeping requirements 2. evaluate the compliance culture 3. assess the nature of the types of business arrangements the firm is involved in 4. identify red flags for illegal conduct

When are IAs required to amend their Form ADV?

90 days after the end of the adviser's fiscal year and more frequently if the info in the brochure becomes inaccurate. Amendments to part 1a & 2a to be filed electronically via IARD.

When must you deliver to clients the brochure?

Before you enter into the advisory contract. Not required to be delivered to registered investment companies., BDCs, or clients receiving impersonal advice that is charged less than $500 per year.

Describe the delivery of Brochures and Brochure Supplements

Each investment adviser to deliver to each prospective advisory client a written disclosure statement or "brochure" describing the adviser's business practices and educational and business background AND a brochure supplement. Wrap fees must receive a separate wrap fee disclosure document.

Who can you send an electronic disclosure to?

Only those who have consented to electronic delivery

Who delivers the brochure if the adviser has sub-advisors

The client may elect to receive all disclosures from the main advisor. Or can elect to receive the brochure from the sub-adviser directly. Must agree to this. If there is a conflict from the sub-adviser, then the main adviser must get a consent from the client.

Rule 204-2 Why must an IA keep Books and Records?

The primary purposes of the SEC's inspections are to ensure that the adviser is in compliance with the federal securities laws and that its activities are otherwise consistent with the information disclosed in its Form ADV.

How long must an IA keep books and records for?

generally, all books and records must be maintained and preserved in an easily accessible place for five years from the end of the fiscal year during which the last record entry was made, the first two years in an appropriate office of the adviser.

When do you need to provide the email communication?

within 24 hours of the request. And if you keep spam or personal email .