SEC Chair Jay Clayton at his confirmation hearing talking and gesturing SEC Chair Jay Clayton in 2017. (Photo: Diego M. Radzinschi/ALM Media)

Updated to include SEC extension email address, industry comment, and Form CRS, Reg BI question.

The Securities and Exchange Commission is providing filing relief amid the coronavirus pandemic.

Registered retail investment advisers and advisers to private funds will have a 45-day extension to file annual updates to Form ADV and Form PF, respectively. The Investment Advisers Act of 1940 requires annual updates to Form ADV's two parts. Updates are due 90 days within the end of an advisory firm's fiscal year. For those that follow the calendar year, the filing deadline is March 30.

A rule implemented in 2011 requires private fund advisers with at least $150 million in assets under management to file Form PF within 15 days of the end of each fiscal quarter.

According to the SEC's order, the filing relief is for those firms that had deadlines between March 13–when the order was issued–and April 30. For the time being, firms will have a maximum of 45 days from their original deadline to file the updates, but the order suggests that that could be extended further out.

"The time period for any or all of the relief may, if necessary, be extended with any additional conditions that are deemed appropriate," according to the order.

Under a section of the Advisers Act, the SEC has authority to extend filing exemptions if it "is necessary or appropriate in the public interest and consistent with the protection of investors," according to the order issued by the Commission.

In order to qualify, the adviser must be "unable to meet a filing deadline or delivery requirement due to circumstances related to current or potential effects" of the coronavirus pandemic, the order says.

The order does not specify any circumstances that would prevent a firm from filing the updates.

Firms using the extension must email the SEC at [email protected].

They must also disclose on their website that they are using the filing extension, the reasons why it could not file updates on time, and the estimated date that it expects to file the updates.

Smaller firms regulated by states may need extension more

Smaller firms are more likely to need the extensions, said Duane Thompson, president of Potomac Strategies, a policy consultancy to the financial services industry.

"The SEC is providing a lot of flexibility to advisers because we're in a situation of constant change," said Thompson. "It will be particularly helpful for small advisers."

In 2017, there were 12,172 adviser firms registered with the SEC. About 57 percent employ fewer than 10 advisers.

"If the principal of a small firm is sick, or put in quarantine, this extension could be useful. For larger firms, it won't be as significant of a problem—I'm not sure why a firm would use the extension of they didn't need to. The filings are a routine part of their business operation," he added.

A filing extension of the kind the SEC issued may be more valuable to smaller firms, with less than $25 million in assets under advisement, that are registered with state regulators.

An inquiry to the North American Securities Administrators Association, which represents state regulators, as to whether states were considering filing extensions was not returned before press time.

Form CRS and Reg BI extended?

Registered advisors and dually registered broker-dealers are required to file a new Form CRS, or client relationship summary, with the SEC, beginning on May 1 with a June 30 deadline.

And the SEC's new Regulation Best Interest standard of conduct regulation is slated for a July 1 start.

Asked whether the coronavirus disruption to the economy would delay the implementation of new regulations, a spokesperson for the SEC declined comment.



© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.