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.
Form ADV is the uniform form used by investment advisers that manage at least $25 million in assets to register with both the SEC and state securities authorities. The Form ADV is divided into 3 parts. Part 1 is a fill-in-the blank form that contains information about the investment advisory business and how it operates. Part 2 is a brochure in narrative form that include plain English disclosures of the adviser’s business practices, fees, conflicts of interest, and disciplinary information. The last part is Part 3, which contains the relationship summary, which investment advisers are required to deliver to retail investors that discloses certain information about the firm.
The Financial Crimes Enforcement Network requires certain financial institutions to file a Suspicious Activities Reports (“SAR”) to report suspicious transactions, as detailed in their FinCEN SAR Electronic Filing Instructions. This blog will go over some of the important aspects of filing a Suspicious Activity Report.
FINRA released regulatory notice 21-03, FINRA Urges Firms to Review Their Policies and Procedures Relating to Red Flags of Potential Securities Fraud Involving Low-Priced Securities, discussing issues with these securities offerings and fraud. Specifically, including those involving COVID-19 and cannabis related businesses, which appear to have been part of potential pump-and-dump or market manipulation schemes that target unsuspecting investors.
In the notice, FINRA states that “Low-priced securities tend to be volatile and trade in low volumes. It may be difficult to find accurate information about them. There is a long history of bad actors exploiting these features to engage in fraudulent manipulations of low-priced securities. Frequently, these actors take advantage of trends and major events — such as the growth in cannabis-related businesses or the ongoing COVID-19 pandemic — to perpetrate the fraud.”
On December 1, 2020, the state of New York adopted new regulations that amended its Investment Advisory Act to require the registration of investment adviser representatives (“IAR”) including principals, supervisors, and solicitors through the WebCRD/IARD system. Prior to the rule change, New York was the only state that did not license IAR via the WebCRD/IARD system. The change to to New York IAR registration will go into effect on February 1, 2021 for all new registrants, and December 2, 2021 for any New York IARs already providing services, provided they apply for registration by August 31, 2021. The Amendments The Read more about Change to New York IAR Registration[…]