Form ADV

Form ADV serves as the primary regulatory filing that investment advisers must submit to government authorities. It functions as both a registration document and an ongoing disclosure tool. Investment advisers must complete and file Form ADV electronically through a system called the when they apply for SEC registration.

The makes it illegal for investment advisers to intentionally provide false information or leave out important facts when completing Form ADV. Advisers who violate this rule face potential enforcement actions from regulators.

Form ADV contains multiple interconnected parts. Each part captures different types of information about how investment advisers operate and provides appropriate disclosures to various audiences.

Part 1 regulatory information: Part 1 provides the SEC with essential information about investment advisers and their employees. staff use this information to create risk profiles for registered advisers. These profiles help regulators determine which firms to examine and how to allocate their resources. Part 1 has two distinct sections: Part 1A, which all SEC-registered and state-registered advisers must complete, and Part 1B, required only for advisers registering with state securities authorities. While Part 1 information becomes publicly available online, advisers do not need to deliver it directly to their clients.

Part 2 client disclosure: Part 2 functions as a comprehensive written disclosure statement. It provides clients and prospective clients with critical information about the adviser's business practices, fee structures, and potential conflicts of interest. The Investment Advisers Act requires advisers to provide written disclosures to clients and prospective clients at specific times. These disclosures are commonly called "brochures." They may take the form of Part 2 of Form ADV or alternative written documents containing the same required information.

In 2010, the SEC implemented significant reforms to Part 2 of Form ADV. These changes established new formatting requirements, mandated electronic filing to ensure public availability online, and required advisers to present information in plain English style. The SEC simultaneously created Part 2B, known as the "Brochure Supplement." This supplement provides specific disclosures about investment professionals who make investment decisions for client assets.

Advisers Act establishes specific delivery requirements. Advisers must provide Part 2 to prospective clients before starting the advisory relationship. They must deliver annual updates or summaries of important changes to existing clients. They must also provide current Part 2B information to both prospective and existing clients. Many hedge fund managers voluntarily deliver Parts 2A and 2B to private fund investors. However, legal requirements typically mandate delivery only to the client entity, which is the fund itself.

In June 2019, the SEC adopted Part 3 of Form ADV, known as . This rule requires registered investment advisers who serve retail investors to complete, file, and deliver relationship summaries to such clients. The regulation defines "retail investor" as individuals or their legal representatives who seek or receive services primarily for personal, family, or household purposes. Form CRS must be delivered before establishing advisory relationships and updated when circumstances change significantly. Recent 2024 SEC guidance emphasized proper delivery procedures and accurate disclosure of services. Examination staff identified common deficiencies in relationship summary content and delivery practices.

Registered advisers to private funds often establish affiliated entities that serve as general partners or managing members of their funds. For tax and regulatory efficiency, advisers frequently create multiple affiliated entities that manage different private funds. These entities may meet the Investment Advisers Act definition of "investment adviser" because they provide compensated investment advice.

To promote filing efficiency, the SEC permits affiliated entities of registered advisers to rely on . This allows multiple related entities to register through a single Form ADV filing. Since October 2017, U.S.-based advisers may include controlled or commonly controlled affiliated advisers as "" on their Form ADV. This is allowed provided they collectively operate as a single advisory business.

and relying advisers constitute a single advisory business when they meet five specific conditions. First, they advise only private funds and separate accounts pursuing substantially similar or related investment strategies. Second, each relying adviser and its personnel remain subject to the filing adviser's supervision and control. Third, the filing adviser maintains its principal office in the United States. Fourth, all advisory activities remain subject to Advisers Act requirements and SEC examination authority. Fifth, all entities operate under unified administered by a single .

Filing advisers that use umbrella registration must complete for each relying adviser. Schedule R provides detailed information about these affiliated entities. Current Form ADV structures distinguish between sections relating solely to filing advisers and those covering both filing and relying advisers. Advisers using umbrella registration must include information about both filing and relying advisers in filings and other required regulatory reports.

Maintaining consistency across Form ADV represents a critical compliance requirement. Information reported in Parts 1 and 2 must align with content in compliance manuals, fund offering documents, marketing materials, and related regulatory filings. Advisers should carefully review Form ADV instructions and glossaries. Defined terms typically appear in italics throughout the form. Recent 2025 SEC examination priorities highlighted consistency issues as areas of particular focus. Examiners compare ADV disclosures against actual firm practices and other regulatory filings.

Hedge fund managers with less than $25 million in face SEC registration prohibitions and must register with state authorities. Managers with $25-100 million in regulatory assets under management must register with their principal place of business state and remain subject to that state's regulatory oversight. State requirements vary significantly within this category. This variation requires careful analysis of obligations across relevant jurisdictions.

States may require from hedge fund managers even when those managers are exempt from state registration requirements. Form ADV accommodates notice filings with any selected state. However, many states exempt advisers whose clients consist exclusively of financial institutions or institutional investors from notice filing obligations.

The SEC requires investment advisers to disclose certain business activities outside their advisory operations on Form ADV Parts 1A, 2A, and 2B. Advisers must report specific financial industry activities. completing Part 2B must disclose investment-related outside activities or activities providing substantial income or requiring significant time commitments.

Outside business activities can create actual or perceived conflicts of interest between individual interests and client interests. These conflicts require careful disclosure and management through Form ADV reporting mechanisms. Current SEC examination practices emphasize thorough review of outside business activity disclosures. Examiners focus on consistency between disclosures and actual practices and conflict management procedures.