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News January 3, 2005 Issue

SEC Warns Late ADV Filers of Possible Enforcement Action

Check your mail.

On December 14, the SECís Pacific Regional Office sent a letter to a significant number of advisers informing them that they are delinquent in filing their annual Form ADV updates since 2003. The letter warns that the firms have until February 11, 2005 to file the required annual updating amendments "and avoid an enforcement proceeding based on the delinquency."

It appears that hundreds of advisers have received the letter. The help line ((323) 965-4515) set up by the Pacific Regional Office to deal with inquiries on the letter has been deluged with calls. "We are diligently working through the backlog," said the help lineís outgoing message, which promises callers that their messages will be returned. Moreover, the SEC took the trouble to create and post a FAQ for delinquent filers on its website. Due to the holiday week, however, IM Insight has not been able to confirm the actual number of letters sent.

The news comes on the heels of an NASD crackdown on late CRD filings by broker-dealers. On November 30, the NASD announced that it had censured and fined 29 brokerage firms over $9.2 million for late disclosures of their repsí complaints and disciplinary events. Last month, the NASD announced a new CRD tool that would enable brokers, but not advisers, to identify late filings (see IM Insight, December 6, 2004).

For those on the receiving end of the Pacific Officeís letter, here are some important points from the SECís FAQ (posted at:

  • If your firm has a December 31 fiscal year and you failed to file your annual updates for 2003 and 2004, you will have to file two annual updating amendments, one for 2003 and one for 2004. "The information in each filing should be correct as if you had made the filing when it was due," said the SECís FAQ. "For example, if you had a reportable disciplinary event that occurred in October 1994, it must be reported in both your filings, even though 10 years have now passed since the date of the event."
  • Filing a delinquent annual update, with its "as of" information, will overwrite more current ADV information. After you file the missing annual updates, you will need to file an additional amendment to add the overwritten information back in. Hint: Before amending your ADV to reflect the missing annual updates, print out a full copy of your current Form ADV so you can confirm that any overwritten information is added back in.
  • Mere receipt of the December 14 letter is not a "regulatory proceeding" reportable as a disciplinary event on Form ADV Item 11.G.
  • Before you submit your update, make sure you have funds in your IARD account to cover the filing.
  • For technical questions about how to file on IARD or pay filing fees, call the IARD help line at (240) 386-4848 or e-mail
  • For questions about the December 14 letter, the fact that your firm has been listed as a delinquent filer, which annual updating amendments are missing, or possible enforcement proceedings, call (323) 965-4515 or e-mail
  • For questions about what information to provide in response to an item on Form ADV, call the SECís Office of Investment Adviser Regulation at (202) 942-0691 or e-mail

More next week.