• SEC Adopts Amendments to Form ADV Part 2
  • August 19, 2010 | Author: David J. Baum
  • Law Firm: Alston & Bird LLP - Washington Office
  • On July 21, 2010, the Securities and Exchange Commission (SEC) adopted amendments (the “Amendments”) to Form ADV and the rules relating to it under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Part 2 of Form ADV (“Part 2”), commonly known as the “brochure,” is the primary disclosure document used by registered investment advisers to provide prospective and existing clients with material information relating to the adviser, its business practices and its investment strategies. Part 2 has always been arranged in a “check-the-box” format, requiring advisers to answer multiple-choice and fill-in-the-blank questions. While the “check-the-box” format conveyed the information it was intended to convey, there was concern that it did not always describe the adviser’s business or conflicts in a way that was accessible to clients, as the questions asked did not always correspond well to an adviser’s business. The Amendments change Part 2 to now require advisers to provide information in a narrative form, written in plain English, in an effort to ensure that clients receive clear, easy-to-read disclosure statements that will allow them to evaluate the risks associated with a particular investment adviser.