[Federal Register Volume 68, Number 137 (Thursday, July 17, 2003)]
[Rules and Regulations]
[Pages 42247-42250]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 03-18122]
[[Page 42247]]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 275 and 279
[Release Nos. 34-48167; IA-2144; File No. S7-10-00]
RIN 3235-AD21
Electronic Filing by Investment Advisers; Amendments To Form ADV;
Technical Amendments
AGENCY: Securities and Exchange Commission.
ACTION: Final rule; technical amendments.
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SUMMARY: The Commission is adopting technical revisions to Forms ADV,
ADV-W and ADV-H and related rules under the Investment Advisers Act of
1940, which were published in the Federal Register on September 22,
2000 (65 FR 57437). The amendments are designed to aid advisers in the
completion and filing of Forms ADV, ADV-W and ADV-H by clarifying
certain instructions to the forms.
EFFECTIVE DATE: July 11, 2003.
FOR FURTHER INFORMATION CONTACT: Don L. Evans, Senior Counsel, at 202-
942-0719, Office of Investment Adviser Regulation, Division of
Investment Management, Securities and Exchange Commission, 450 Fifth
Street, NW., Washington, DC 20549-0506.
SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission
(``Commission'' or ``SEC'') is adopting technical amendments to rules
0-4, 203-1, 203-3, and 204-1 [17 CFR 275.04, 275.203-1, 275.203-3, and
275.204-1] and to Forms ADV, ADV-W and ADV-H [17 CFR 279.1, 279.2 and
279.3] under the Investment Advisers Act of 1940 [15 U.S.C. 80b]
(``Advisers Act'' or ``Act''). The Commission is also withdrawing rule
203A-6 [17 CFR 275.203A-6] under the Advisers Act.
I. Discussion
Investment advisers today utilize the Investment Adviser
Registration Depository (``IARD''), a one-stop electronic filing
system, to make registration and ``notice'' filings with the SEC and
state regulators over the Internet. In conjunction with launching
electronic filing for advisers in 2000, the Commission adopted several
rules and rule amendments under the Advisers Act, related to the
IARD.\1\ Certain administrative issues have arisen regarding these
revised rules and forms, and we are making technical amendments to
address these issues.\2\
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\1\ Electronic Filing by Investment Advisers; Amendments to Form
ADV, Investment Advisers Act Release No. 1897 (Sept. 12, 2000) [65
FR 57438 (Sept. 22, 2000)].
\2\ In addition to the changes detailed below, we are (i)
revising the Form ADV-H Item 1B language to refer to ``Item 12 of
Part 1A'' of Form ADV rather than simply ``Item 12'', (ii)
clarifying that Instruction 3 to Form ADV-W applies only to state-
registered advisers, and (iii) amending rules 203-1, 203-3 and 204-
1, the General Instructions to Form ADV, and Form ADV-W to reflect
the correct name of the IARD operator due to a NASD corporate
restructuring in the fall of 2002.
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II. Rule and Form Amendments
A. Rule 0-4: General Requirements of Papers
We are amending rule 0-4 to extend filing deadlines when the IARD
is closed to filings. Electronic filings otherwise required to be made
in late December, when the IARD is shut down to process state renewals,
must be filed on or before the following January 7. Other IARD filings
required to be made on a day the IARD is closed to filings will be
considered timely if filed on the following business day.\3\
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\3\ Rule 0-4(a)(2) [17 CFR 275.0-4(a)(2)].
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B. Rule 204-1: Amendments to Application for Registration
We are deleting language in rule 204-1(b) that set out the
transition period to IARD for SEC-registered advisers; this transition
period ended April 30, 2001.\4\ We are also amending the rule to
clarify that advisers must file all amendments to Part 1A of Form ADV
electronically with the IARD absent a continuing hardship exemption.
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\4\ We are also deleting rule 203A-6, which set out the
transition period from SEC registration for certain advisers located
in Ohio; this transition period ended March 30, 2000.
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C. Form ADV: Uniform Application for Investment Adviser Registration;
Part 1A, Item 7: Financial Industry Affiliations
We are revising the instructions to Form ADV, Part 1A, Items 7A and
7B. The change to Item 7A accommodates advisers that share personnel
with an affiliated broker-dealer. NASD will accept a single Form U-4
filing, through IARD, to register an individual both as the advisory
firm's investment adviser representative and as a registered
representative of the advisory firm's affiliated broker-dealer,
provided the adviser names the affiliated brokerage firm on its Form
ADV.\5\ Duplicative Form U-4 filings by an adviser and its affiliated
broker-dealer create unnecessary burdens; as a convenience to filers,
we are amending Part 1A, Item 7 to permit (but not require) an adviser
to name, on Section 7.A. of Schedule D, any related persons that are
broker-dealers.
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\5\ The Form U-4 is the NASD uniform application for securities
industry registration or transfer. Investment advisers submit Form
U-4 through IARD to register investment adviser representatives with
state securities authorities; broker-dealers submit it through the
Central Registration Depository (CRD) for their registered
representatives.
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Another change, to Item 7B, allows an adviser to cross-reference to
the Form ADV of its SEC-registered affiliate in order to disclose the
limited partnerships and limited liability companies that the affiliate
advises.\6\ An SEC-registered adviser may omit, from Section 7.B. of
Schedule D, the details of LPs or LLCs managed by its related persons
that are also SEC-registered advisers, so long as the adviser explains
in the miscellaneous section of Schedule D that the detailed list is
available on the related person's Form ADV.\7\ In order to pass a
``completeness check'' on the IARD, however, all advisers that answer
``yes'' to Item 7B must list at least one LP or LLC in Section 7.B of
Schedule D. The IARD will not allow an adviser to file a Form ADV that
fails the completeness check.
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\6\ A number of advisers currently follow this procedure in
reliance on the SEC staff response to a ``frequently asked
question'' on the SEC's IARD website.
\7\ This explanation must state: (1) That the adviser has
related SEC-registered investment advisers who manage investment
related LPs or LLCs that are not listed in Section 7.B of its
Schedule D, (2) that complete and accurate information about those
investment related LPs or LLCs is available in Section 7.B of
Schedule D of the Form ADVs of the related SEC-registered advisers;
and (3) whether the adviser's clients are solicited to invest in any
of those LPs or LLCs. If the adviser has a related person that is a
general partner in an investment-related LP or manager of an
investment-related LLC, and that related person is not registered
with the SEC as an investment adviser, the adviser must continue to
list all LPs and LLCs of that related person in Section 7.B of its
own Schedule D.
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III. Effective Date; Findings Under the Administrative Procedure Act
The technical amendments adopted today shall become effective July
11, 2003. An adviser is not required to file a separate amendment to
its Form ADV solely to reflect these revisions. However, when it next
files a Form ADV (including amending its Form ADV), Form ADV-W or Form
ADV-H on or after the effective date, the adviser must use the rules
and forms as revised.\8\ These amendments make minor, technical changes
to the manner in which advisers submit registration information to the
Commission through
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the IARD, or eliminate outdated or confusing material contained in the
rules and instructions for submitting such information. Therefore, the
Commission finds that there is good cause to adopt them as final rules.
Moreover, the amendments impose no new obligations on advisers; they
are ``rules of agency * * * procedure'' that fall within exceptions to
the general notice and comment requirements of the Administrative
Procedure Act.\9\
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\8\ An adviser filing a Form ADV amendment through the IARD on
or after the effective date will necessarily be submitting the
revised version of the form. Because the revisions to Section 7.A of
Schedule D add data fields, advisers may need to re-enter their
responses to that Section. Advisers should review their responses to
all of the affected sections of the Form carefully to ensure that
they remain correct and complete.
\9\ 5 U.S.C. 553(b)(3)(A) and (B). For similar reasons, the
amendments do not require analysis under the Regulatory Flexibility
Act or analysis of major rule status under the Small Business
Regulatory Enforcement Fairness Act. See 5 U.S.C. 601(2) (for
purposes of Regulatory Flexibility Act analyses, the term ``rule''
means any rule for which the agency publishes a general notice of
proposed rulemaking); 5 U.S.C. 804(3)(C) (for purposes of
Congressional review of agency rulemaking, the term ``rule'' does
not include any rule of agency organization, procedure, or practice
that does not substantially affect the rights or obligations of non-
agency parties).
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IV. Consideration of Promotion of Efficiency, Competition, and Capital
Formation
Section 202(c) of the Advisers Act requires the Commission, when
engaging in rulemaking that requires it to consider or determine
whether an action is necessary or appropriate in the public interest,
to consider, in addition to the protection of investors, whether the
action will promote efficiency, competition, and capital formation.\10\
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\10\ 15 U.S.C. 80b-2(c).
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As discussed above, the rule and form amendments will aid advisers
in the completion of Forms ADV, ADV-W and ADV-H. The technical
amendments may enhance efficiency further by clarifying the forms and
their instructions, thereby improving an adviser's understanding of
IARD and eliminating duplicative filings.
Because the rule and form amendments apply equally to all advisers,
we do not anticipate that any competitive disadvantages would be
created. We do not expect the amendments, as technical changes, to have
an effect on capital formation or the capital markets.
V. Statutory Authority
We are adopting amendments to rule 0-4, General Requirements of
Papers, under sections 204 and 211(a) of the Investment Advisers Act of
1940 [15 U.S.C. 80b-4 and 80b-11(a)].
We are adopting amendments to rule 203-1, Application for
Investment Adviser Registration, under sections 203(c)(1), 204, and
211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 80b-3(c)(1),
80b-4, and 80b-11(a)].
We are adopting amendments to rule 203-3, Hardship Exemptions,
under sections 203(c)(1), 204, and 211(a) of the Investment Advisers
Act of 1940 [15 U.S.C. 80b-3(c)(1), 80b-4, and 80b-11(a)].
We are withdrawing rule 203A-6 [17 CFR 275.203A-6], Transition
Period for Ohio Investment Advisers, under section 203(h) [15 U.S.C.
80b-3(h)]; section 203A(c) [15 U.S.C. 80b-3a(c)]; and section 211(a)
[15 U.S.C. 80b-11(a)] of the Investment Advisers Act of 1940.
We are adopting amendments to rule 204-1, Amendments to Application
for Registration, under sections 203(c)(1), 204, and 211(a) of the
Investment Advisers Act of 1940 [15 U.S.C. 80b-3(c)(1), 80b-4, and 80b-
11(a)].
We are adopting amendments to rule 279.1, Form ADV, under section
19(a) of the Securities Act of 1933 [15 U.S.C. 77s(a)], sections 23(a)
and 28(e)(2) of the Securities Exchange Act of 1934 [15 U.S.C. 78w(a)
and 78bb(e)(2)], section 319(a) of the Trust Indenture Act of 1939 [15
U.S.C. 77sss(a)], section 38(a) of the Investment Company Act of 1940
[15 U.S.C. 78a-37(a)], and sections 203(c)(1), 204, and 211(a) of the
Investment Advisers Act of 1940 [15 U.S.C. 80b-3(c)(1), 80b-4, and 80b-
11(a)].
We are adopting amendments to rule 279.2, Form ADV-W, under
sections 203(h), 204, and 211(a) of the Investment Advisers Act of 1940
[15 U.S.C. 80b-3(h), 80b-4, and 80-11(a)].
We are adopting amendments to rule 279.3, Form ADV-H, under
sections 203(c)(1), 204, and 211(a) of the Investment Advisers Act of
1940 [15 U.S.C. 80b-3(c)(1), 80b-4, and 80b-11(a)].
Need for Technical Amendment
As published, the final regulations contain errors which need to be
clarified.
List of Subjects in 17 CFR Parts 275 and 279
Investment advisers, Reporting and recordkeeping requirements.
Text of Rule and Form Amendments
0
For the reasons set out in the preamble, Title 17, Chapter II of the
Code of Federal Regulations is amended as follows:
PART 275--RULES AND REGULATIONS, INVESTMENT ADVISERS ACT OF 1940
0
1. The authority citation for Part 275 continues to read in part as
follows:
Authority: 15 U.S.C. 80b-2(a)(11)(F), 80b-2(a)(17), 80b-3, 80b-
4, 80b-6(4), 80b-6a, 80b-11, unless otherwise noted.
* * * * *
0
2. Paragraph (a) of Sec. 275.04 is revised to read as follows:
Sec. 275.0-4 General requirements of papers and applications.
(a) Filings. (1) All papers required to be filed with the
Commission shall, unless otherwise provided by the rules and
regulations, be delivered through the mails or otherwise to the
Securities and Exchange Commission, Washington, DC 20549. Except as
otherwise provided by the rules and regulations, such papers shall be
deemed to have been filed with the Commission on the date when they are
actually received by it.
(2) All filings required to be made electronically with the
Investment Adviser Registration Depository (``IARD'') shall, unless
otherwise provided by the rules and regulations in this part, be deemed
to have been filed with the Commission upon acceptance by the IARD.
Filings required to be made through the IARD on a day that the IARD is
closed shall be considered timely filed with the Commission if filed
with the IARD no later than the following business day.
(3) Filings required to be made through the IARD during the period
in December of each year that the IARD is not available for submission
of filings shall be considered timely filed with the Commission if
filed with the IARD no later than the following January 7.
Note to Paragraph (a)(3): Each year the IARD shuts down to
filers for several days during the end of December to process
renewals of state notice filings and registrations. During this
period, advisers are not able to submit filings through the IARD.
Check the Commission's Web site at http://www.sec.gov/iard for the
dates of the annual IARD shutdown.
* * * * *
0
3. Part 275 is amended by:
0
a. Revising the term ``NASD Regulation, Inc. (NASDR)'' to read ``NASD''
in: Sec. Sec. 275.203-1(d) and 275.204-1(b)(3).
0
b. Revising the term ``NASD Regulation, Inc.'' to read ``NASD'' in
Sec. 275.203-3(b)(3).
0
c. Revising the term ``NASDR'' to read ``NASD'' in the following
sections:
1. 275.203-1(d);
2. 275.203-3, Note to Paragraph (b); and
3. 275.204-1(d) each time it appears.
0
4. Section 275.203A-6 is removed and reserved.
0
5. Section 275.204-1 is amended by:
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0
a. Adding a note at the end of paragraph (a);
0
b. Revising paragraph (b); and
0
c. Revising the first sentence of paragraph (d).
The addition and revisions read as follows.
Sec. 275.204-1 Amendments to application for registration.
(a) * * *
Note to Paragraph (a): Information on how to file with the
Investment Adviser Registration Depository (``IARD'') is available
on our website at www.sec.gov/iard.
(b) Electronic filing of amendments. (1) You must file all
amendments to Part 1A of your Form ADV electronically with the IARD,
unless you have received a continuing hardship exemption under Sec.
275.203-3.
(2) If you have received a continuing hardship exemption under
Sec. 275.203-3, you must, when you are required to amend your Form
ADV, file a completed Part 1A of Form ADV on paper with the SEC by
mailing it to the NASD.
* * * * *
(d) Filing fees. You must pay the NASD (the operator of the IARD)
an initial filing fee when you first electronically file Part 1A of
Form ADV. * * *
PART 279--FORMS PRESCRIBED UNDER THE INVESTMENT ADVISERS ACT OF
1940
0
6. The authority citation for Part 279 continues to read as follows:
Authority: The Investment Advisers Act of 1940, 15 U.S.C. 80b-1,
et seq.
0
7. Form ADV (referenced in Sec. 279.1) is amended by:
0
a. In the form and instructions to the form, revising the terms
``NASDR'', ``NASD Regulation, Inc.'', ``National Association of
Securities Dealers Regulation, Inc. (``NASDR'')'', and ``National
Association of Securities Dealers, Inc. (``NASD'')'' to read ``NASD'';
0
b. In the instructions to the form, revising the heading ``Supplemental
Instructions for Transition to Electronic Filing'' to read
``Supplemental Instructions for Electronic Filing'' and within those
Supplemental Instructions revising the section entitled ``SEC
Requirements''.
0
c. In Part 1A, revising the unnumbered paragraph in Item 7A. and Item
7B.; and
0
d. In Schedule D, revising Section 7.A.
The revisions read as follows:
Note: The text of Form ADV does not and this amendment will not
appear in the Code of Federal Regulations.
Form ADV
* * * * *
Supplemental Instructions for Electronic Filing
SEC Requirements
SEC rules require advisers that are registered or applying for
registration with the SEC to file electronically. All applications for
registration filed after December 31, 2000 must be filed electronically
through the IARD system. See SEC rule 203-1.
* * * * *
Part 1A
* * * * *
Item 7 Financial Industry Affiliations
* * * * *
A. * * *
If you checked Item 7A.(3), you must list on Section 7.A. of
Schedule D all your related persons that are investment advisers. If
you checked Item 7A.(1), you may elect to list on Section 7.A. of
Schedule D all your related persons that are broker-dealers. If you
choose to list a related broker-dealer, the IARD will accept a single
Form U-4 to register an investment adviser representative who also is a
broker-dealer agent (``registered rep'') of that related broker-dealer.
B. * * *
If ``yes,'' for each limited partnership or limited liability
company, complete Section 7.B. of Schedule D. If, however, you are an
SEC-registered adviser and you have related persons that are SEC-
registered advisers who are the general partners of limited
partnerships or the managers of limited liability companies, you do not
have to complete Section 7.B. of Schedule D with respect to those
related advisers' limited partnerships or limited liability companies.
To use this alternative procedure, you must state in the
Miscellaneous Section of Schedule D:
(1) that you have related SEC-registered investment advisers that
manage limited partnerships or limited liability companies that are not
listed in Section 7.B. of your Schedule D;
(2) that complete and accurate information about those limited
partnerships or limited liability companies is available in Section
7.B. of Schedule D of the Form ADVs of your related SEC-registered
advisers; and
(3) whether your clients are solicited to invest in any of those
limited partnerships or limited liability companies.
* * * * *
Schedule D
* * * * *
SECTION 7.A. Affiliated Investment Advisers and Broker-Dealers
You MUST complete the following information for each investment adviser
with whom you are affiliated. You MAY complete the following
information for each broker-dealer with whom you are affiliated. You
must complete a separate Schedule D Page 3 for each listed affiliate.
Check only one box: [ballot] Add [ballot] Delete [ballot] Amend
Legal Name of Affiliate:
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Primary Business Name of Affiliate:
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Affiliate is (check only one box): [ballot] Investment Adviser [ballot]
Broker-Dealer [ballot] Dual (Investment Adviser and Broker-Dealer)
Affiliated Investment Adviser's SEC File Number (if any) 801-----------
Affiliate's CRD Number (if any) ----------
* * * * *
0
8. Form ADV-W (referenced in Sec. 279.2) is amended by:
0
a. In Instruction 3, revising the first undesignated paragraph;
0
b. In Instruction 3, revising the first sentence in the second
undesignated paragraph;
0
c. In Instruction 3, revising the second sentence in the third
undesignated paragraph;
0
d. In Instruction 5, revise the phrase ``NASD Regulation, Inc.'' to
read ``NASD;'' and
0
e. In the Execution section, revise the fourth sentence.
The revisions read as follows.
Note: The text of Form ADV-W does not and this amendment will
not appear in the Code of Federal Regulations.
Form ADV-W
* * * * *
Instructions for Form ADV-W
* * * * *
3. I am a state registered adviser filing for partial withdrawal.
How do I complete Item 2?
If you are a state registered adviser ceasing advisory business in
any of the jurisdictions from which you are withdrawing, check ``yes.''
* * *
* * * You are permitted to enter a cease date of December 31 to
avoid being charged state renewal fees in jurisdictions from which you
are withdrawing (during the last part of December each year the IARD
suspends filing operations for several days to process renewals of
state registrations and state notice filings; and you are
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unable to submit any filings during that time). * * *
Execution
* * * I understand that if any information contained in items 1D or
1E of this Form ADV-W is different from the information contained on
Form ADV, the information on this Form ADV-W will replace the
corresponding entry on the adviser's Form ADV composite available
through IARD. * * *
* * * * *
0
9. Form ADV-H (referenced in Sec. 279.3) is amended by revising the
phrase ``Item 12 of Form ADV'' in the third and fourth unnumbered
paragraphs in Item 1B. to read ``Item 12 of Part 1A of Form ADV''.
Note: Form ADV-H does not and this amendment will not appear in
the Code of Federal Regulations.
Dated: July 11, 2003.
By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-18122 Filed 7-16-03; 8:45 am]
BILLING CODE 8010-01-P