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The Securities and Exchange Commission Adopts Amendments to Form ADV and Investment Adviser Act Rules

The Securities and Exchange Commission (SEC) adopted amendments to Form ADV and Investment Advisers Act of 1940 rules.  These amendments are designed to provide additional information regarding advisers, including information about their separately managed account (SMA) business, incorporate a method for private fund adviser entities operating a single advisory business to register using a single Form ADV, and clarify certain Form ADV items and instructions. The SEC also adopted amendments to the Advisers Act books and records rule and technical amendments to several Advisers Act rules to remove transitional provisions that are no longer necessary. 

OCIE Issues Risk Alert on Conflicts of Interest Regarding Adviser Compensation for Certain Share Class Recommendations

The SEC’s Office of Compliance Inspections and Examinations (OCIE) recently issued a Risk Alert announcing a new exam initiative that will focus on how investment advisers registered under the Investment Advisers Act of 1940 are addressing the conflicts of interest that arise when advisers receive compensation or other financial incentives for recommending mutual fund and 529 plan share classes that have substantial loads or distribution fees. The Alert states that "examples of conflicts of interest related to share class recommendations include situations where the adviser is also a broker-dealer or affiliated with a broker-dealer that receives fees from sales of certain share classes, and situations where the adviser recommends that clients purchase more expensive share classes of funds for which an affiliate of the adviser receives more fees."

To learn more about these developments and other investment management news, please contact a member of the Ballard Spahr Investment Management Group or the attorney with whom you regularly work.


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