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News November 7, 2005 Issue

New IARD Feature Allows SEC to Send E-mails Directly to Advisers

Youíve got mail!

Last week, the SEC unveiled a new feature of the IARD system: the ability to send e-mail messages to each "contact person" listed on SEC-registered advisersí Form ADVs. The staff plans to use the feature to send out regulatory and compliance alerts, as well as firm-specific reminders. "Itís going to send you notices 60 and 30 days before the annual amendment is due," explained Jamey Basham, branch chief in the SECís Office of Investment Adviser Regulation. "If you fail to file [the annual amendment], it will send you notices 30 and 60 days" after the deadline has passed.

Three things must happen before an adviser can receive these e-mails:

First, the adviser must have provided an accurate e-mail address in Form ADV Part 1, Item 1.J. Thatís the item that asks for the name, address, phone number, fax number, and e-mail address of the firmís Form ADV contact person ("an employee . . . authorized to receive information and respond to questions" about the form).

"A number of investment advisers still arenít providing an e-mail address," said Basham. "They are not going to get the benefits of the notices under the system unless they supply an e-mail address for the contact person." And, he added, "if a firmís contact person has an e-mail address, the form instructions require the firm to include it." Leaving it out "is not an option."

Second, the contact person must receive a "verification" e-mail from the IARD system. IARD generated thousands of those e-mails last week, sending one to every contact person for which the system had an e-mail address. So: check with your firmís contact person. If his or her e-mail, as listed on Form ADV, is up-to-date, but no verification e-mail was received last week, chances are your firmís spam filter blocked it. Try adding SECIARDNotifications@nasd.com to your spam filterís white list and then call the NASDís Gateway Call Center, at (240) 386-4848, and ask for the e-mail to be resent. (The NASD Gateway Call Center is handling all IT-related questions about the IARD e-mail feature, said Basham.)

Third, the contact person needs to click on the link in the verification e-mail to activate the e-mail feature. The system, said Basham, "will only send messages to people who have validated their e-mail address."

If you need to change your contact personís e-mail address, no problem: IARD automatically will send a new verification e-mail to the new contact person e-mail address any time the e-mail address on Form ADV Item 1.J. is changed.

Industry participants, such as lawyers and consultants, who are not advisory firm contact persons cannot sign up to be on the SECís mailing list, said Basham. At this point, itís not clear whether the regulatory and compliance information sent via the SECís e-mail alerts also will be systematically posted somewhere on the SECís website, for the general public to view. Basham noted that in the past, the staff has used the IARD home page as a place to post items of general interest. He predicted that the staff "will continue to do so," in connection with using the e-mail system to "reach out" to registrants.

Lastly, a practical pointer: Compliance officers should review their firmís Form ADV to determine who is listed as the contact person. If a clerical employee is listed, that person should be told of the significance of any e-mails from SECIARDNotifications@nasd.com, so that they are not mistaken for spam or a pfishing scheme, and they are appropriately forwarded to relevant firm personnel.