Updating the Brochure

Timely Updating the Brochure

Part 2A of the Form ADV requires advisers to create narrative brochures containing information about the advisory firm. Both federal and state registered advisers must prepare and deliver a brochure to their clients. They both also have requirements set by the SEC and NASAA for timely updating their brochure

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Part 2A Appendix 1 of Form ADV: Wrap Fee Program Brochure

Part 2A Appendix 1 of Form ADV: Wrap Fee Program Brochure

Any RIA compensated under a wrap fee program for sponsoring, organizing, or administering the program, or for selecting, or providing advice to clients regarding the selection of, other investment advisers in the program, does not use the normal brochure or Part 2A of the ADV. Instead, that adviser furnishes clients and prospective clients Part 2A, Appendix 1.

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Brochure Delivery Requirements

Brochure Delivery Requirements

Part 2A of the Form ADV requires advisers to create narrative brochures containing information about the advisory firm. Both federal and state registered advisers must prepare and deliver a brochure to their clients according to the brochure delivery requirements set in 17 CFR § 275.204-3 – Delivery of brochures and brochure supplements.

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Order Routing

Order Routing and The Price of Non-Disclosure

In May of this year, the SEC fined Bloomberg Tradebook LLC for $5 million, censured the firm, and issued a cease and desist order for misleading customers about how their orders were routed. Specifically, the SEC found that the Firm made material misrepresentations in regard to order routing. They omitted material facts about how they handled certain customer trade orders.

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FINRA Rule 3241: Registered Person as Customer’s Beneficiary

Challenges with Outside Business Activity Disclosures

An outside business activity (“OBA”) is defined as a registered person having any business activity outside the scope of the relationship with their member firm. As defined in FINRA Rule 3270, this may include acting as an employee, independent contractor, sole proprietor, officer, director, or partner for any other entities besides the member firm. Generally, the activity may also involve compensation or a reasonable expectation of compensation.

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Disclosures and Attestations for Associated Persons

Associated person disclosures and attestations are not a “one size fits all” list of documents. The purpose of disclosures and attestations is to educate your employees on the expectations of the firm based on firm procedure and regulatory mandates. Another important purpose is to give representatives a chance to know relevant updates and changes that may require pre-approval and/or added compliance responsibilities.

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