SEC and NFA Provide Relief and Guidance to Investment Advisers Impacted by COVID-19

The Securities and Exchange Commission (SEC) and the National Futures Association (NFA) have issued the following guidance to investment advisers working remotely in response to circumstances related to COVID-19:

  • Investment advisers are not required to update Form ADV to list the temporary remote working addresses from which firm employees are conducting advisory business, as long as the employees are temporarily teleworking as part of the firm’s business continuity plan due to such circumstances.
  • If firm personnel are unable to access mail or deliveries at an office location, an investment adviser will not be deemed to have custody of client assets under Rule 206(4)-2 of the Investment Advisers Act of 1940 until firm personnel are able to access mail or deliveries at that office location.
  • Registered associated persons (APs) of commodity pool operators and commodity trading advisers may work remotely from locations not listed as a branch office on Form 7-R and for which there is no designated branch office manager, so long as the firm implements and documents alternative supervisory procedures to adequately supervise the APs’ activities and meet its record-keeping requirements.

On March 13, the SEC issued an order granting exemptions to investment advisers permitting conditional extensions to the filing and delivery deadlines of Form ADV and Form PF (the Order). The Order applies only to filing or delivery deadlines occurring on or before April 30 and is subject to the following conditions:

  • The investment adviser is unable to meet the deadline due to circumstances related to COVID-19.
  • The investment adviser promptly notifies the SEC, via email at IARDLive@sec.gov for Form ADV or FormPF@sec.gov for Form PF, of (i) its reliance on the Order, (ii) the reasons why it could not meet the deadline, and (iii) the estimated filing or delivery date. In relation to Form ADV, the investment adviser must also promptly disclose this information on its public website (or if not applicable, notify its clients and/or private fund investors).
  • The investment adviser files Form ADV or Form PF, as applicable, and delivers Form ADV Part 2 (or summary of material changes) as soon as practicable, but not later than 45 days after the original deadline (e.g., not later than May 14 as it relates to Form ADV for investment advisers with a Dec. 31 fiscal year end).

The SEC and NFA are expected to update regulatory relief, guidance and assistance for investment advisers and regulated entities in general. We encourage our clients to check BakerHostetler’s Coronavirus Resource Center for other analysis and resources to assist you in understanding, preparing for and responding to questions and issues due to the COVID-19 pandemic.

Authorship Credit: Adam D. Gale, Teresa Goody Guillén and Anthony S. Calanni