facade of SEC building U.S. Securities and Exchange Commission building in Washington, D.C. (Photo: Diego M. Radzinschi/THE NATIONAL LAW JOURNAL)

The Securities and Exchange Commission (SEC) has issued a superseding order that extends the temporary exemptions previously issued in mid-March.

In recognition of the continued challenges faced by investment advisers due to COVID-19, the relief provided by the order applies to certain filing or delivery obligations under the Investment Advisers Act of 1940 that are due on or after March 13, 2020, through June 30, 2020, if certain conditions are met. (The relief time period under the original order applied to filing or delivery obligations due on or after March 13, 2020, through April 30, 2020.)

The order applies to SEC-registered investment advisers, exempt reporting advisers and private fund advisers.

Rule 204-1 of the Advisers Act generally requires investment advisers to amend their Form ADV on an annual basis by filing an updating amendment within 90 days after the end of their fiscal year. In addition, investment advisers must promptly file interim amendments to their Form ADV under certain circumstances, such as if the information previously provided becomes materially inaccurate.

Investment advisers are also generally required under Rule 204-3(b)(2) of the Advisers Act to annually deliver their Form ADV, Part 2 — "brochure" — or a summary of material changes, to each client within 120 days after the end of their fiscal year if material changes were made to the brochure since the last updating amendment.

Rule 204-3(b)(4) requires that investment advisers promptly deliver an amended Brochure (or supplement) if certain information previously provided is materially revised.

Subject to satisfying certain conditions, the order exempts investment advisers from the requirement to file an amendment to Form ADV under Rule 204-1, and from the requirement to deliver Form ADV, Part 2 (or a summary of material changes) to existing clients in connection with filing or delivery obligations that are due on or after March 13, 2020, through June 30, 2020.

The exemptions do not alter the existing requirement that investment advisers registered with the SEC prior to June 30, 2020, comply with the new Form CRS disclosure requirement and file the Form with the SEC no later than June 30, 2020.

In addition, exempt reporting advisers are exempt during the relief time period from the requirements of Rule 204-4 under the Advisers Act if the order's conditions are satisfied. Similarly, private fund advisers required by Adviser Act Section 204(b) and Rule 204(b)-1 to file Form PF are exempt from such requirements during the relief period if the Order's conditions are satisfied.

To rely on the order, investment advisers must meet the following conditions:

  • The investment adviser's inability to meet a filing deadline or delivery requirement must be due to circumstances related to the current or potential effects of COVID-19;
  • The investment adviser must promptly notify SEC staff via e-mail at [email protected] that it is relying on the order with respect to its filing of Form ADV or delivery of its brochure, summary of material changes, or brochure supplement, and disclose on its public website (or promptly notify clients if it does not have a public website) that it is relying on the order (private fund advisers must notify SEC staff via e-mail at [email protected] if they rely on the order); and
  • The investment adviser must file Form ADV and deliver the brochure (or summary of material changes) and brochure supplement as soon as practicable, but not later than 45 days after the original due date for filing or delivery, as applicable.

The SEC consistently reminds investment advisers that advisory clients (and the SEC) have "an interest in the timely availability of required information about investment advisers." Thus, investment advisers should remember their obligations, including their fiduciary duty, and continue to evaluate their obligations and duties in light of the current environment.

As the SEC's understanding of the circumstances surrounding COVID-19 evolves, the relief period or conditions specified by the order may be extended or modified, and the SEC may issue other relief in the future.

Beth Miller is a member of the Employee Benefits practice group at Spencer Fane LLP in the firm's Overland Park, Kansas, office. She helps clients by identifying practical solutions to a wide variety of legal matters in the areas of employer-sponsored retirement plans, executive compensation, fiduciary obligations, and advisory services.


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