August 11 2015


Herb Perone

IAA Supports Goals of Proposed Additional Data Reporting on Form ADV

Suggests Closer Targeting to Relieve Burden on Small Firms

Washington, DC (August 11, 2015) – While expressing its support for Securities and Exchange Commission (SEC) rulemaking designed to enhance risk monitoring and regulatory safeguards for the asset management industry, the Investment Adviser Association (IAA) is suggesting changes to proposed amendments to Form ADV to reduce the regulatory burden on small advisory firms and to protect client confidentiality.

The amendments at issue would require advisers to report additional data about their business and their clients’ investments, particularly in client accounts that are managed individually – which the SEC refers to as “separately managed accounts” or SMAs.

In a comment letter filed today, the IAA agreed that the “collection and analysis of additional census-type data about SMAs will further strengthen the SEC’s ability to oversee the asset management industry, including assessing industry trends and risks” and will enhance the SEC’s ability to conduct risk-based examinations of advisers.

But while the SEC should have access to appropriate data, the IAA letter said, it should collect that information in the most efficient and cost-effective way possible, with a “particularly keen eye” on the way costs disproportionately affect smaller advisers.

The IAA letter offered a number of suggestions intended to help target the SEC’s approach, including:

  • Increasing the basic threshold for reporting the use of borrowings and derivatives from $150 million to $500 million, which would alleviate reporting burdens and associated costs on approximately 3,000 small firms while retaining more than 95 percent of the data the SEC is seeking.
  • Making the reporting of asset composition and derivatives exposures in SMAs non-public to address concerns about disclosure of client confidential information and advisers’ proprietary information, and to address concerns that the derivatives disclosure could potentially confuse or mislead investors.
  • Amending questions on custody of assets in Form ADV, which are needlessly confusing for advisers and could be clarified to generate more accurate, consistent responses from the industry.

The IAA letter also includes other suggestions regarding disclosure on parallel managed accounts, custodians and proposed amendments to the books and records rule.

Given that the proposed amendments to Form ADV Part 1A will affect all of the approximately 11,500 SEC-registered investment advisers, the IAA is asking the SEC to give advisers 12 months from adoption of the final rules to ensure that their accounting and data management systems can capture the newly required data.

The IAA’s full comment letter is available here.

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About Investment Adviser Association

The Investment Adviser Association (IAA) is the leading trade association representing the interests of SEC-registered investment adviser firms. The IAA’s more than 550 member firms collectively manage assets in excess of $16 trillion for a wide variety of institutional and individual investors. In addition to serving as the voice of the advisory profession on Capitol Hill and before the SEC, DOL, CFTC and other U.S. and international regulators, the IAA provides extensive compliance and educational services to its membership. For more information, visit or follow us on LinkedIn and Twitter.

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