NASAA Series 65, Uniform Investment Adviser Law ExaminationLaws, Regulations, and Guidelines, including Prohibition on Unethical Business PracticesMedium
An investment adviser (IA) has decided to switch from providing primarily financial planning services to offering discretionary portfolio management. This change represents a material alteration to its business operations. Under the Investment Advisers Act of 1940, what action must the IA take regarding its Form ADV?
- AThe IA must file an amendment to its Form ADV promptly.
- BThe IA must file an updated Form ADV Part 2 within 90 days of its fiscal year-end.
- CThe IA is only required to update its Form ADV if its Assets Under Management (AUM) change significantly.
- DThe IA must file a new initial Form ADV and re-register with the SEC.
Show answer & explanationAnswer & explanation
Correct answer: A. The IA must file an amendment to its Form ADV promptly.
Any material change to an IA's business operations, such as a shift in services offered, requires a prompt amendment to Form ADV. This ensures that the IA's registration information and disclosures remain current and accurate for regulators and clients.
Why the other options are wrong
- B. This describes the annual updating amendment, not the requirement for a material change.
- C. While AUM changes can trigger updates, a material change in services is also a standalone trigger for a prompt amendment.
- D. A material change requires an amendment, not a complete re-registration and new initial filing.
Form ADV Amendments
Updates or changes made to an investment adviser's registration document (Form ADV) to reflect current and accurate information.
- Annual Updating Amendment (within 90 days of fiscal year-end).
- Prompt Amendments for material changes.
- Material changes include business type, disciplinary actions, ownership.
- Ensures accurate public disclosure.
Memory trick: ADV must always reflect the truth, quickly if things change.