skip to main content

Our lawyers provide innovative and practical counsel on a wide variety of capital raising and securities law compliance matters. We represent clients ranging from emerging private companies to established public companies. With each, we build long-term relationships, generating efficiencies and helping them realize their business goals.

SEC Adopts Amendments to Form ADV Regarding Separately Managed Accounts and Umbrella Registration; also Adopts Amendments to the Recordkeeping Rule under the Advisers Act

September 15, 2016 download PDF


On August 25, 2016, the SEC adopted amendments to Form ADV, and amendments to Rule 204-2 (the "Recordkeeping Rule") and certain other rules under the Investment Advisers Act of 1940, as amended (the "Advisers Act")[1]which will:

  • require additional information regarding separately managed accounts ("SMAs");
  • permit by rule "umbrella registration" under a single Form ADV of related private fund advisers operating as a single advisory business;
  • require additional information about, among other things, an investment adviser's (an "IA") advisory business, including branch office operations and the use of social media; and
  • require the maintenance of additional materials related to the calculation and distribution of performance information, regardless of the number of persons to whom such performance information is distributed.

Amendments to Form ADV

Separately Managed Accounts. The amendments to Form ADV require that more detailed information regarding SMAs than the SEC currently collects be provided on Schedule D of Part 1A, including information relating to the types of assets held in SMAs, the use of derivatives and borrowings[2] in SMAs and the IA's regulatory assets under management attributable to SMA's ("SMA RAUM").  Notably, under the amendments to Form ADV, any accounts other than accounts of registered investment companies, business development companies and private funds[3] or other pooled investment vehicles are considered SMAs.

Under the amendments to Form ADV, all IAs that report that they have regulatory assets under management attributable to separately managed accounts are required to report the approximate percentage of SMA RAUM invested in twelve broad asset categories, such as cash and cash equivalents, exchange-traded equity securities, non-exchange traded equity securities, U.S. government/agency bonds, corporate bonds (investment grade and non-investment grade), derivatives, etc.[4] Then, depending upon the amount of SMA RAUM, the IA is required to complete more detailed questions regarding those SMAs as follows:


Finally, IAs are required to identify any custodians that hold 10% or more of the IA's SMA RAUM, as well as the amount of the IA's SMA RAUM held at the custodian.  The 10% threshold is intended to assist the SEC in identifying custodians that serve a significant number of IAs' SMA clients.

Umbrella Registration for Certain Private Fund Advisers.  The amendments codify the regime introduced by the 2012 ABA No-Action Letter[7] regarding "umbrella registration" that permits related IAs (that is, IAs that control, are controlled by or are under common control with each other) operating as a single advisory business to file a single Form ADV, and clarify and expand the disclosure required with respect to each IA covered by the "umbrella registration."  Amendments to Form ADV's General Instructions provide for the conditions under which umbrella registration are available (which conditions are consistent with the conditions set forth in the 2012 ABA No-Action Letter), as follows:

(i) The filing IA and each relying adviser ("RA") advise only private funds and SMA clients that are "qualified clients" (as defined in Rule 205-3 under the Advisers Act) and are otherwise eligible to invest in the private funds advised by the filing IA or an RA and whose accounts pursue investment objectives and strategies that are substantially similar or otherwise related to those of such private funds;

(ii) The filing IA has its principal office and place of business in the U.S. and, therefore, all of the substantive provisions of the Advisers Act and the rules thereunder apply to the filing IA's and each RA's dealings with each of its clients, regardless of whether any client or the filing IA or RA providing the advice is a U.S. person;

(iii) Each RA, its employees and the persons acting on its behalf are subject to the filing IA's supervision and control and, therefore, each RA, its employees and the persons acting on its behalf are "persons associated with" the filing IA (as defined in §202(a)(17) of the Advisers Act);  

(iv) The advisory activities of each RA are subject to the Advisers Act and the rules thereunder, and each RA is subject to examination by the SEC; and

(v) The filing IA and each RA operate under a single code of ethics adopted in accordance with Rule 204A-1 under the Advisers Act and a single set of written policies and procedures adopted and implemented in accordance with Rule 206(4)-(7) under the Advisers Act and administered by a single chief compliance officer ("CCO") in accordance with that rule.

In addition, the SEC adopted a new Schedule R to Part 1A that must be completed for each RA and includes identifying information, basis for registration, and ownership information for each RA.  A new question on Schedule D also requires identification of the particular adviser (whether the filing IA or an RA) that manages or sponsors each private fund reported on Form ADV.

Additional Identifying and Advisory Business Information.  The amendments to Form ADV also require an IA to provide additional information on Part 1A, including, but not limited to, the following:[8]

Topic SEC 

Amendments to the Recordkeeping Rule  

Rule 204-2(a)(16) under the Advisers Act currently requires IAs to maintain records supporting performance claims in communications that are distributed or circulated to "10 or more persons." The amendments remove the "10 or more persons" condition and replace it with "any person." In addition, an amendment to Rule 204-2(a)(7) expands the categories of written communications received and sent by an IA that an IA is required to maintain to include communications relating to the performance or rate of return of any or all managed accounts or securities recommendations and supporting documentation.  

Effective Date

An IA filing an initial Form ADV or an amendment to an existing Form ADV on or after October 1, 2017 is required to provide responses to the newly adopted amendments.  Amendments to the Recordkeeping Rule apply to communications circulated or distributed after October 1, 2017.



[1] See, "Form ADV and Investment Advisers Act Rules" (August 25, 2016), available at,,,, and  For a blackline reflecting the amendments to Form ADV, see

[2] As discussed in more detail below, reporting on the use of borrowings and derivatives is only required with respect to SMAs with a net asset value of at least $10 million.

[3] The adopting release does not address funds of one.  As a result, depending on the facts and circumstances, IAs may either report funds of one as pooled investment vehicles in Item 5 and complete a corresponding Section 7.B.(1) in Schedule D, or report such funds as SMAs in Item 5.

[4] IAs may use their own internal methodologies in determining how to categorize assets, so long as their methodologies are consistently applied and consistent with information the IAs report internally and to current and prospective clients.  Also, IAs should not look through a SMA's investment in funds, as the SEC seeks to understand the extent to which SMAs assets are invested in funds.

[5] For this purpose, "gross notional exposure" is the percentage obtained by dividing (i) the sum of (a) the dollar amount of any borrowings and (b) the gross notional value of all derivatives, by (ii) the RAUM of the account.

[6] The amendment does not require the IA to file a semi-annual update to this information, but rather to include the information for both semi-annual periods in the IA's annual update of its Form ADV.

[7] See, American Bar Association, Business Law Section, SEC Staff Letter (Jan. 18, 2012), available at (the "2012 ABA No-Action Letter").

[8] The SEC also adopted numerous clarifying and technical amendments to Form ADV which are not described in this memorandum.

© 2021 Paul, Weiss, Rifkind, Wharton & Garrison LLP

Privacy Policy