Update: Form ADV and Form PF Conditional Relief

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On March 25, 2020, the U.S. Securities and Exchange Commission (SEC) issued an order superseding its previous, March 13 order that provided targeted relief with respect to Form ADV and Form PF filing and delivery obligations of registered investment advisers or exempt reporting advisers where the filing deadline cannot be met “due to circumstances related to current or potential effects of COVID-19.” Please see the Sidley Update below for more information on the order from March 13.

The revised order

  • extends the relief to Form ADV and Form PF filings that fall due between March 13 and June 30, 2020
  • eliminates the requirement for the adviser to provide the SEC and clients (via the adviser’s public website or directly) with a description of the reasons why the adviser is relying on the order and an estimated date by which the required filing will occur

To take advantage of this relief, the adviser will need to notify (i) the SEC (by email) and (ii), with respect to relief from Form ADV filing and delivery requirements, clients by posting on the adviser’s public website (or directly to clients/private fund investors if the adviser does not have a public website).

The adviser must make the required filing or delivery “as soon as practicable, but not later than 45 days after the original due date.”

We expect that most registered investment advisers or exempt reporting advisers are prepared to file Form ADV/their exempt reporting adviser filing on time and will do so rather than acknowledge that they are “unable” to file on time. We are monitoring this and will update you if we find that a significant number of advisers decide to rely on the latest relief.

We are also monitoring whether advisers are relying on the Form PF relief. We expect that a number of advisers will rely on the Form PF relief that, as extended to June 30, now covers large hedge fund advisers who typically file their quarterly Form PF around May 30.

See the current order here.

See the previous order here.

March 17, 2020

On March 13, 2020, the U.S. Securities and Exchange Commission (SEC) issued an order providing targeted relief with respect to Form ADV and Form PF filing and delivery obligations of registered investment advisers or exempt reporting advisers that would otherwise fall due between March 13 and April 30, 2020, where the deadline cannot be met “due to circumstances related to current or potential effects of COVID-19.”

To take advantage of this relief, the adviser will have to provide the following information (i) by email to the SEC and (ii) with respect to relief from Form ADV filing and delivery requirements, through a posting on the adviser’s public website (or directly to the adviser’s clients or private fund investors if the adviser does not have a public website):

  1. a statement that the adviser is relying on the relief
  2. a brief description “of the reasons why it could not file or deliver” its Form ADV or Form PF “on a timely basis”
  3. the date on which the adviser estimates that it will make the relevant filing or delivery

The adviser must make the required filing or delivery “as soon as practicable, but not later than 45 days after the original due date.”

Advisers who seek to extend should consider carefully the required description of the reasons it could not file or deliver its forms on time and the unintended message it could send to its clients and investors with respect to its business continuity preparedness more generally.

See the order here: https://www.sec.gov/rules/other/2020/ia-5463.pdf
Custody Rule

We are also aware of a number of industry participants who have asked the SEC for guidance on whether an adviser relying on the 206(4)-2(b)(4) exemption from the Custody Rule (the Annual Audit Exception) would be in violation of the rule if the adviser’s fund fails to distribute its audited financial statements within 120 days after the end of its fiscal year due to COVID-19-related circumstances.
In 2010, the SEC staff issued guidance explaining that that they would not recommend enforcement action for a violation of rule 206(4)-2 against an adviser that is relying on the Annual Audit Exception and that “reasonably believed that the pool’s audited financial statements would be distributed within the 120-day deadline, but failed to have them distributed in time under certain unforeseeable circumstances.”

We will keep you updated on any developments.

Sidley Austin LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from professional advisers. In addition, this information was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any U.S. federal, state or local tax penalties that may be imposed on such person.

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