SEC Staff Discusses Current Initiatives Related to Investment Advisers at SEC Speaks in 2017 Conference

by Morrison & Foerster LLP - Broker-Dealer Compliance + Regulation
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On February 24, 2017, the U.S. Securities and Exchange Commission’s Division of Investment Management (the “Staff”) participated in a panel at the Practising Law Institute’s SEC Speaks in 2017 conference.  As part of the discussion, the Staff provided an update on the current initiatives relating to investment advisers, as well as the Staff’s priorities for 2017, some of which are briefly summarized below.

Separately Managed Accounts

The Staff discussed the recently adopted amendments to Form ADV, which, among other things, enhances investment managers’ disclosure obligations regarding separately managed accounts.  Although the Staff does not define “separately managed accounts” in the recently adopted amendments, it considers, for the purposes of reporting on Form ADV, “advisory accounts other than those that are pool investment vehicles (i.e., registered investment companies, business development companies and pooled investment vehicles that are not registered (including, but not limited to, private funds)) to be separately managed accounts.”[i]  The Staff believes that the additional disclosures will enhance its “ability to effectively carry out [the Staff’s] risk-based examination program and other risk assessment and monitoring activities.”[ii]

Umbrella Registration

Additionally, amended Form ADV codifies umbrella registration for registered private fund advisers who operate a single advisory business through multiple legal entities (often for tax or business reasons).  The Staff explained that this discretionary rule will streamline the registration and reporting process, and provide additional and more consistent data about registered private fund advisers.

Robo-Advisers

The Staff discussed the growing popularity of automated advisers, or “robo-advisers,” as well as the Staff’s work to monitor and engage with robo-advisers to ensure their compliance with the Investment Advisers Act of 1940, as amended (the “Advisers Act”).  Created by tech-minded individuals, robo-advisers “use innovative technologies to provide discretionary asset management services to their clients through online algorithmic-based programs.”[iii]  The Staff’s February 2017 Investor Bulletin and their Guidance Update stress that robo-advisers, as registered investment advisers, have fiduciary obligations to their clients and must comply with their legal obligations under the Advisers Act.


[i] Form ADV and Investment Advisers Act Rules, Release No. IA-4509; File No. S7-09-15.

[ii] Form ADV and Investment Advisers Act Rules, Release No. IA-4509; File No. S7-09-15.

[iii] Robo-advisers, IM Guidance Update No. 2017-02, February 2017.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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