On March 13, 2020, the Securities and Exchange Commission (SEC) issued a temporary order (the Order)1 providing conditional exemptive relief to investment advisers registered with the SEC (RIAs) and exempt reporting advisers (ERAs) with respect to certain filing, delivery and reporting requirements under the Investment Advisers Act of 1940, as amended (the Advisers Act) due to disruptions and limitations caused by coronavirus disease 2019 (COVID-19). The Order provides impacted firms with conditional exemptive relief from these filing, delivery and reporting requirements in the form of an extension of up to 45 days from the originally required due date. RIAs or ERAs with filing, delivery or reporting obligations between March 13, 2020, and April 30, 2020 (the Period) may rely on the Order. The SEC noted it may extend the Order past April 30 and may issue other relief if warranted in the future.
Which filing, delivery and reporting requirements are covered by the Order?
If the conditions detailed below are satisfied, exemptions are available from the following filing, delivery and reporting requirements arising during the Period:
Form ADV Filing and Reporting. An RIA is exempt from the requirements of Rule 204-1 under the Advisers Act to file an annual Form ADV update or otherwise to file an updated Form ADV. In addition, an ERA is exempt from the requirements of Rule 204-4 under the Advisers Act to file reports on Form ADV.
Form ADV Delivery. An RIA is exempt from the requirements of Rules 204-3(b)(2) and (b)(4) under the Advisers Act to deliver its Form ADV Part 2 (or a summary of material changes).
Form PF. An RIA is exempt from the requirements of Section 204(b) of the Advisers Act and Rule 204(b)-1 thereunder to file Form PF.
What are the conditions applicable to the exemptive relief?
To rely on the Order, RIAs and ERAs must satisfy the Order’s specified conditions, which are as follows:
Impact from COVID-19. RIAs and ERAs may rely on the Order if they are unable to meet filing, delivery or reporting requirements due to current or potential COVID-19 effects.
Notifications to SEC. An RIA relying on the Order with respect to the filing of Form ADV or delivery of its brochure, summary of material changes or brochure supplement must promptly email the SEC at IARDLIVE@sec.gov and disclose on its website (i) that it is relying on the Order, (ii) the reasons it could not timely file or deliver its Form, and (iii) the estimated date of filing and/or delivery. If an RIA does not have a website, it must promptly notify its clients and/or private fund investors.
Furthermore, an RIA relying on the Order with respect to filing Form PF must promptly email the SEC via FormPF@sec.gov, stating (i) it is relying on the Order, (ii) the reasons the RIA could not timely file its Form and (iii) the estimated date of filing.
Compliance within 45 days of original due date. As soon as practicable, but not later than 45 days after the original due date for filing, delivery or reporting, an RIA or ERA must file the Form ADV and/or Form PF, as applicable, and deliver the brochure (or a summary of material changes) and brochure supplement.
Other Considerations
The SEC also noted that advisory clients and the SEC have an interest in the timely availability of required information about RIAs and ERAs, and reminded firms that rely on the Order to continue to evaluate their obligations, including their fiduciary duty, under the federal securities laws.
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1Order Under Section 206A of the Investment Advisers Act of 1940 Granting Exemptions From Specified Provisions of the Investment Advisers Act and Certain Rules Thereunder, SEC Release No. IA-5463 (March 13, 2020), available at: https://us.eversheds-sutherland.com/portalresource/ia-5463.pdf.
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