[Federal Register Volume 65, Number 185 (Friday, September 22, 2000)]
[Rules and Regulations]
[Pages 57438-57524]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-23888]



[[Page 57437]]

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Part II





Securities and Exchange Commission





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17 CFR Parts 200, 275, and 279



Electronic Filing by Investment Advisers; Amendments To Form ADV; Final 
Rule

  Federal Register / Vol. 65, No. 185 / Friday, September 22, 2000 / 
Rules and Regulations  

[[Page 57438]]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 200, 275, and 279

[Release No. IA-1897; 34-43282; File No. S7-10-00]
RIN 3235-AD21


Electronic Filing by Investment Advisers; Amendments To Form ADV

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: The Commission is adopting new rules and rule amendments under 
the Investment Advisers Act of 1940 to require that advisers registered 
with the Commission make filings under the Act with the Commission 
electronically through the Investment Adviser Registration Depository 
(IARD). The Commission is also adopting amendments to Forms ADV and 
ADV-W that prepare those forms for electronic filing. The new rules 
implement our statutory mandate to create a one-stop electronic filing 
system for investment advisers and to provide investors with a readily 
accessible database of information about investment advisers and 
persons associated with investment advisers.

DATES: Effective October 10, 2000.
    The transition to electronic filing, beginning in January 2001, is 
discussed in Section I.B of the SUPPLEMENTARY INFORMATION section of 
this Release.

FOR FURTHER INFORMATION CONTACT: Contact Jennifer B. McHugh, Special 
Counsel, or Jennifer L. Sawin, Special Counsel, at (202) 942-0691, 
Office of Investment Adviser Regulation, Division of Investment 
Management, Securities and Exchange Commission, 450 Fifth Street, N.W., 
Washington, D.C. 20549-0506. Visit the IARD page on our website at 
www.sec.gov/iard, or email [email protected]>. We urge interested 
persons with access to the Internet to review information about the 
IARD and the new rules on our website before contacting our staff.

SUPPLEMENTARY INFORMATION: The Commission is adopting amendments to 
rules 30-5 and 30-11 of the SEC's Organization and Program Management 
rules [17 CFR 200.30-5 and 200.30-11], new rule 203-3 and Form ADV-H; 
adopting amendments to rules 0-2, 0-7, 203-1, 203-2, 203A-1, 203A-2, 
and 204-1 [17 CFR 275.0-2, 275.0-7, 275.203-1, 275.203-2, 275.203A-1, 
275.203A-2, and 275.204-1]; and Form ADV, Form ADV-W, and Form 4-R [17 
CFR 279.1, 279.2, and 279.4] under the Investment Advisers Act of 1940 
[15 U.S.C. 80b-1] (the Advisers Act or the Act). The Commission also is 
withdrawing rule 204-5 [17 CFR 275.204-5] and Forms 5-R, 6-R, 7-R, and 
ADV-Y2K [17 CFR 279.5, 279.6, 279.7, and 279.9] under the Advisers Act.

Table of Contents

Executive Summary

I. Discussion
    A. The Investment Adviser Registration Depository
    B. Transition to Electronic Filing
    1. Applicants For Registration as an Investment Adviser
    2. Advisers Currently Registered with the Commission
    3. Hardship Exemptions
    4. Setting Up an IARD Account
    5. Getting Help
    C. Amendments to Form ADV
    1. Part 1 of Form ADV
    2. Part 2 of Form ADV
II. Effective Date
III. Cost-Benefit Analysis
IV. Paperwork Reduction Act
V. Summary of Final Regulatory Flexibility Analysis
VI. Statutory Authority
Text of Rule and Form Amendments
Form ADV
Form ADV-W
Form ADV-H
Form ADV-NR

Executive Summary

    The Commission is adopting new rules and rule amendments under the 
Advisers Act to require registered investment advisers to make filings 
with us electronically through the Investment Advisers Registration 
Depository (IARD). The IARD, which will be operated by NASD Regulation, 
Inc. (NASDR), will permit investment advisers to satisfy their filing 
obligations under state and federal law with a single electronic filing 
made over the Internet.
    We are also amending Forms ADV and ADV-W to update the forms and 
prepare them for electronic filing. The amendments to Form ADV 
primarily affect Part 1 of the form. We are deferring, for later 
consideration, adoption of amendments to Part 2 of Form ADV and related 
rules.
    An applicant for registration as an adviser after January 1, 2001 
must submit its application electronically through the IARD using 
amended Form ADV. Advisers registered with the Commission must 
transition to electronic filing by submitting amendments to their Form 
ADVs through the IARD during the first four months of 2001 in 
accordance with a transition schedule we are today adopting. After 
April 2001, the Commission will no longer accept paper filings of Form 
ADV unless the adviser has been granted a hardship exemption.

I. Discussion

    In April, the Commission proposed amendments to the filing rules 
under the Advisers Act as well as amendments to Forms ADV and ADV-W.\1\ 
We received over 70 comments on the proposed rules.\2\ Commenters 
overwhelmingly supported electronic filing by advisers. Today we are 
adopting those amendments, but are deferring adoption of amendments to 
Part 2 of Form ADV for reasons we describe below.\3\
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    \1\ Investment Advisers Act Release No. 1862. (Apr. 5, 2000) [65 
FR 20524 (Apr. 17, 2000)] (``Proposing Release'')
    \2\ A summary of comments prepared by our staff is available in 
our Public Reference Room in File No. S7-10-00, and on our web site 
at www.sec.gov/rules/extra/iardsumm.
    \3\ We changed the numbering of the parts of Form ADV from Roman 
(Part I and II) to Arabic (Part 1 and Part 2) numbers. In this 
Release, however, we use Arabic numbers to refer to the parts fo 
Form ADV before and after amendment. At some points, we refer 
separately to old Part II and proposed Part 2 in order to clarify 
which rules adviseers must follow during an interim period.
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A. The Investment Adviser Registration Depository

    The Commission and the state securities authorities have created an 
electronic filing system, the IARD, through which investment advisers 
will make filings with us and the states over the Internet. NASDR is 
building and will operate the IARD under contracts with the Commission 
and the North American Securities Administrators Association 
(NASAA).\4\ NASDR will be responsible for certain ministerial tasks as 
operator of the IARD, by will not act as a self-regulatory organization 
for advisers.\5\
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    \4\ NASDR is a wholly-owned subsidiary of the National 
Association of Securities Dealers (NASD), a self-regulatory 
organization which supervises broker-dealers that conduct a public 
business in securities other than on an exchange of which the 
broker-dealer is a member. NASAA represents the 50 U.S. state 
securities authorities responsible for the administration of state 
securities laws, also known as ``blue sky laws.'' Currently, 49 
states (all except Wyoming) and the District of Columbia, Guam, and 
Puerto Rico have investment adviser statutes. See www.nasaa.org/search/memberslinks.html.
    \5\ In July, we formally designated NASDR as operator of the 
IARD. Investment Advisers Act Release No. 1888 (July 28, 2000) [65 
FR 47807 (Aug. 3, 2000)].
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    The IARD will be ``rolled out'' in a series of releases beginning 
early next year.
     SEC-Registered Adviser Filings. Firms registered or 
applying for registration with us will use the IARD to file Forms ADV 
and ADV-W

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beginning in January 2001.\6\ We have approved a schedule of filing 
fees that NASDR will charge to support operation of the system,\7\ and 
are today adopting rules requiring all advisers to transition to 
electronic filing during the first four months of 2001.\8\ These rules 
and the transition schedule are described in more detail in Section I.B 
of this Release.
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    \6\ The following other forms under the Advisers Act will 
continue to be submitted to us on paper: Form ADV-E (Certificate of 
Accounting of Client Securities and Funds in the Possession or 
Custody of an Investemnt Adviser); ADV-NR (Appointment of Agent for 
Service of Process by Non-Resident General Partner and Non-Resident 
Managing Agent of an Investment Adviser); and ADV-H (Application for 
a Temporary or Continuing Hardship Exemption). In addition, advisers 
that are institutional investment managers will continue to make 
Form 13F filings through our EDGAR system. Form 13F filings are made 
by many firms other than investment advisers, and it would not be 
feasible to include these filings on the IARD.
    \7\ In Investment Advisers Act Release No. 1888, supra note 5, 
we approved a schedule of filing fees NASDAR will charge. The fee 
schedule is available on our web site at www.sec.gov/iard.
    \8\ Rule 204-1(b) [17 CFR 275 204-1(b)]
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    SEC-registered advisers will be able to make notice filings to, and 
submit filing and other fees to, the states through the IARD after 
January 1, 2001. The IARD will automatically calculate the amount of 
the fees due and will remit funds to the states.\9\ SEC-registered 
advisers will need to fund their IARD accounts with NASDR because the 
IARD will not accept filings if there are insufficient funds on account 
to pay IARD filing fees and state fees. We discuss setting up an IARD 
account in Section I.B.4 of this Release.
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    \9\ An SEC-registered adviser must indicate in Item 2.B of Part 
1A the states in which it has notice filing obligations. IARD will 
determine the amount of state fees due from the adviser based on its 
response.
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     State-Registered Adviser Filings.\10\ In January 2001, the 
IARD will also be ready to accept filings of state-registered advisers. 
State-registered advisers will pay IARD filing fees based on the same 
schedule as SEC-registered advisers. We understand that all states will 
accept filing of Forms ADV and ADV-W through the IARD and that some 
states may require state-registered advisers to use the IARD. State-
registered advisers that are unsure of the requirements of a state in 
which they are registered should contact the state securities 
authority.
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    \10\ In this Release, we refer to both applicants for 
registration as an adviser with a state securities authority and 
persons registered as an adviser with a state securities authority 
as ``state-registered advisers.''
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     Public Access. The information filed through the IARD will 
form a database of information on advisers. Investors will be able to 
search the IARD database using the name of the adviser or an individual 
and obtain access to current information filed on Form ADV. We expect 
the public disclosure component of the IARD to begin operating in mid-
2001. In later system releases we hope to be able to expand the search 
capabilities of the public access system so that investors may be able 
to search for an adviser that meets certain other criteria, e.g., 
search for all advisers that provide financial planning services and 
have offices in a particular state.
    In the Proposing Release, we explained that we would block Internet 
access to social security numbers and sole proprietors' home addresses 
reported on Form ADV.\11\ As urged by some commenters, we will also 
block Internet disclosure of all private residence addresses identified 
in the form,\12\ as well as ``contact employee'' information reported 
on the form.\13\
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    \11\ As we explained in the Proposing Release, Form ADV will 
continue to request social security numbers of persons who have not 
been assigned a CRD number. NASDR needs this information when 
assigning a CRD number to distinguish between persons having the 
same name. Proposing Release, supra note 1, at note 77.
    \12\ We have revised each item and schedule of Form ADV that 
requires an address to inquire whether the address reported is a 
private residence. Items 1.F and 1.G of Part 1A and Sections 1.F, 
1.K and 10 of Schedule D.
    \13\ The contact employee information is provided in response to 
Item 1.J of Form ADV. Commenters expressed concern that the contact 
employee might be inundated with phone calls that would more 
appropriately be directed elsewhere in the advisory firm.
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     Investment Adviser Representative Filings. Advisers will 
also be able to use the IARD for investment adviser representative 
license filings and renewals and to pay fees associated with those 
filings. This portion of the system will not be operational until later 
in 2001. Because we do not separately register or license advisers' 
employees, we have not been involved in development or deployment of 
this part of the IARD.
     Part 2 of Form ADV. The IARD will, in a later system 
release, accept Part 2 of Form ADV. As noted above, the Commission is 
not now adopting amendments to Part 2. Until we adopt revisions, 
advisers must continue to deliver ``old'' Part II to prospective 
clients and annually offer them to clients under our brochure rule.\14\ 
As proposed, we will not require advisers to submit Part II of Form ADV 
to us until the IARD is able to accept advisers' brochures 
electronically.\15\ Under the rules we are adopting, however, Part II 
will be considered filed with us during this interim period.\16\ We 
discuss Part II and the interim rules in Section I.C.2 of this release.
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    \14\ Rule 204-3 [17 CFR 204-3].
    \15\ Rules 203-1(b)(2) and 204-1(c) [17 CFR 275.203-1(b)(2) and 
.204-1(c)].
    \16\ Rule 203-1(b)(2). As a result, state securities authorities 
may continue to require SEC-registered advisers to file with them a 
paper copy of the adviser's Part II of Form ADV. See section 307(a) 
of The National Securities Markets Improvement Act of 1996 (NSMIA), 
(Pub. L. No. 104-290, 110 Stat. 3438) (1996). Several commenters 
objected to this rule, arguing that states have no interest in the 
brochures of SEC-registered advisers. We believe that states should 
continue to be able to require Part II during this hiatus in our 
requirements. Under our rule, a state is free to require Part II 
from all advisers that meet its jurisdictional requirements, from no 
advisers, or upon request.
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B. Transition to Electronic Filing

    The Commission is adopting, substantially as proposed, amendments 
to our filing rules to implement electronic filing and create a 
transition process for advisers currently filing with the Commission on 
paper. The following sections describe the revised requirements both 
for applicants for registration under the Advisers Act and for current 
registrants. Additional guidance may be found in the revised 
instructions to Form ADV and our web site.
1. Applicants for Registration as an Investment Adviser
    Persons applying for registration with the Commission as an 
investment adviser after January 1, 2001 must file Form ADV, as 
amended, through the IARD.\17\ Paper filings on Form ADV will be 
accepted only if the person has obtained a hardship exemption, 
described below.\18\
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    \17\ Rule 203-1(b)(1) [17 CFR 275.203-1(b)(1)]. The Advisers Act 
provides that, within 45 days after a person files an application 
for registration with us, we must either grant registration under 
the Act or institute a proceeding to determine whether registration 
should be denied. Section 203(c)(2) [15 U.S.C. 80b-3(c)(2)]. Under 
our rules, as today amended, an application for registration under 
the Act is considered filed with us on the date that the application 
is accepted by the IARD. Rule 203-1(c) [17 CFR 275.203-1(c)]. The 
IARD will only accept filings that are complete and for which filing 
fees are paid. Some affiliated advisers have filed a single Form ADV 
to register all or some of the affiliates. Our experience is that 
such joint registrations do not work well since each adviser may 
have different responses to the same items. We will no longer accept 
joint registration; each affiliate must file a separate application 
for registration.
    \18\ See infra Section I.B.3.
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2. Advisers Currently Registered With the Commission
    Each adviser registered with the Commission on January 1, 2001 must 
re-file its Form ADV with us through the IARD, using amended Form ADV, 
during one of the first four months of 2001.\19\ All subsequent 
amendments must be made electronically, and if the adviser should 
withdraw its registration,

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Form ADV-W must be filed electronically.\20\
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    \19\ Rule 204-1(b).
    \20\ Rules 204-1(b)(4) and 203-2(b) [17 CFR 275.204-1(b)(4) and 
203-2(b)]. Form ADV-W is in Appendix B to this Release.
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    To facilitate a smooth transition to electronic filing, we have 
assigned each adviser registered with us to one of four groups. Members 
of each group must file amendments to their registration forms by the 
end of one of the first four months of 2001.\21\ They must use revised 
Form ADV, and must file electronically through the IARD unless they 
have obtained a hardship exemption. We have assigned each adviser with 
a fiscal year ending in December to one of the first three months by 
reference to its SEC filing number,\22\ which will permit those 
advisers to use the transitional filing to also satisfy their annual 
updating requirement under our rules.\23\ We have assigned advisers 
having fiscal years ending in months other than December to the group 
that must file no later than the last day of April 2001.\24\
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    \21\ Until an adviser makes its first electronic filing it must 
comply with the updating requirements of our rules by making paper 
filings of Part 1 of Form ADV with us, using ``old'' Form ADV, i.e., 
Form ADV that does not reflect the current amemdments. If an adviser 
should withdraw its registration before making its first electronic 
filing on Form ADV, it must file its Form ADV-W with us on paper. It 
may use either ``old'' Form ADV-W or Form ADV-W as we are amending 
it today.
    \22\ If an adviser's fiscal year (as reported in its current 
Form ADV) ends in December, the adviser must transition to 
electronic filing by submitting an amendment to its Form ADV through 
the IARD no later than:
    (i) Janaury 31, 2001, if the adviser's SEC file number is 801-1 
through 801-36806;
    (ii) February 28, 2001, if the adviser's SEC file number is 801-
36807 through 801-54145; and
    (iii) March 30, 2001, if the adviser's SEC file number is 801-
54146 or higher.
    Rule 204-1(b)(1) [17 CFR 275.204-1(b)(1)].
    \23\ An adviser is required to update its registration forms at 
least annually within 90 days of the end of its fiscal year. Rule 
204-1(a)(1). [17 CFR 204-1(a)(1)].
    \24\ Rule 204-1(b)(1)(ii) [17 CFR 275.204-1(b)(1)(ii)]. Advisers 
are free to file as soon as they complete the entitlement process 
with NASDR as described below. As a result, some advisers may have 
filing options. An adviser having a fiscal year ending on October 
31, for example, could submit an annual updating amendment to us on 
paper in January 2001 and then make subsequent electronic filing by 
the end of April 2001, or could transition to electronic filing 
early, by the end of January.
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3. Hardship Exemptions
    An adviser may request one of two types of hardship exemptions by 
submitting Form ADV-H (on paper) to NASDR.\25\A temporary hardship 
exemption permits the adviser to extend the deadline for a filing for 
seven business days if unexpected difficulties, such as a computer 
malfunction or electrical outage, prevent it from filing.\26\ The 
temporary hardship exemption is available automatically upon filing 
Form ADV-H. A continuing hardship exemption is available only to an 
adviser that is a ``small business'' and can demonstrate that filing 
electronically would create an undue hardship (e.g., the adviser has no 
computer and is unable to afford a filing service).\27\ Although 
advisers requesting a continuing hardship exemption will submit Form 
ADV-H to NASDR, the decision whether to grant an exemption will be made 
by the Commission.\28\
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    \25\ Form ADV-H is in Appendix C to this Release.
    \26\ See rule 203-3(a) [17 CFR 275.203-3(a)]. Some commenters on 
the proposed rule argued that seven days was inadequate. We are 
adopting the rule as proposed. As we noted in the Proposing Release, 
advisers facing a persistent filing impediment should make 
alternative filing arrangements, such as hiring a service bureau.
    \27\ Rule 203-3(b) [17 CFR 275.203-3(b)]. An investment adviser 
generally is a small business if it (a) manages assets of less than 
$25 million, (b) has total assets of $5 million or less, and (c) is 
not in a control relationship with another investment adviser that 
is not a small business. Rule 0-7 [17 CFR 275.0-7]. Since SEC-
registered advisers are primarily larger firms, we expect that few 
will qualify for a continuing hardship exemption.
    \28\ We are delegating authority to grant or deny a continuing 
hardship exemption to our Division of Investment Management. See 
rule 30-5(e)(7) of our Organization and Program Management Rules. 
[17 CFR 200.30e-5(e)(7)].
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4. Setting Up an IARD Account
    In order to file electronically, an adviser must first request and 
obtain access to the IARD and set up an IARD account with NASDR. This 
fall, we will mail each SEC-registered adviser the forms and 
instructions needed to set up an IARD user account with NASDR. Advisers 
must complete these forms, sign them, and mail them back to NASDR. 
NASDR will then create the adviser's IARD account for fee payments, 
assign the adviser a CRD number,\29\ and issue passwords for the 
adviser's authorized personnel. NASDR will also provide the adviser 
with instructions on funding its IARD billing account; the adviser must 
fund its IARD billing account by check or wire transfer before it can 
make an electronic filing through the IARD.\30\
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    \29\ Advisers that already have a CRD account with NASDR will 
use that account. These firms, however, must still complete the 
entitlement forms and return them to NASDR in order to obtain IARD 
access.
    \30\ New applicants for SEC registration can obtain copies of 
the entitlement forms from NASDR at www.iard.com>.
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5. Getting Help
    We designed the IARD with the assistance of an advisory industry 
committee whose members represented different types of advisory firms. 
The committee helped us design the IARD to be easy for advisers to use. 
Under a pilot program, scheduled to begin next month, a small group of 
advisers will make filings through the IARD to test the system. Persons 
completing Form ADV on the IARD will be able to use an on-line help 
function that our staff will update from time to time with answers to 
frequently asked questions. We recognize, however, that the IARD and 
our rule amendments may raise questions for persons filing for the 
first time. Our staff and the staff of NASDR will provide assistance to 
advisers during this transition period. We have created a page on our 
web site to provide information to advisers about electronic 
filing.\31\ We will use the IARD web page to post copies of forms, 
instructions on gaining IARD access, instructions on how to make an 
electronic filing, and answers to frequently asked questions about the 
IARD and electronic filing. We have established a hot line to answer 
questions,\32\ and the NASDR will operate a help desk for advisers.\33\ 
Before calling, we urge advisers and their personnel to consult the 
instructions to Form ADV and our web site.
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    \31\ The site address is www.sec.gov/iard>.
    \32\ Advisers registered with the Commission or applying for 
registration with the Commission can call the Commission staff at 
(202) 942-0691 with legal and regulatory questions relating to Forms 
ADV and ADV-W.
    \33\ Advisers should call NASDR's help desk at (240) 386-4848 
with questions about filling out entitlement forms, setting up an 
IARD account, and using the IARD system.
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C. Amendments to Form ADV

    Form ADV consists of two parts. The first part asks for information 
about the adviser and persons associated with the adviser, which 
provides us with information we need to make registration decisions and 
manage our regulatory and examinations program. The second part 
contains the requirements for a written statement that advisers must 
provide to prospective clients and annually offer to clients under our 
rules.\34\
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    \34\ Rule 204-3. Form ADV, as amended, is in Appendix A to this 
Release.
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1. Part 1 of Form ADV
    We proposed substantial revisions to Part 1 to accommodate 
electronic filing, and to reflect changes in the advisory industry and 
the laws regulating investment advisers.\35\ We proposed to

[[Page 57441]]

reorganize Part 1 using simpler language, and introduce the items with 
brief explanations of why we need the information. We proposed 
substantial revisions to the schedules to Part 1, on which advisers 
must provide information about control persons and details about 
disciplinary events. Finally, we proposed to divide Part 1 further into 
two parts, segregating those items to which all advisers must respond 
(Part 1A) from those additional items to which only state-registered 
advisers must respond (Part 1B).\36\
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    \35\ Form ADV will exist in both an electronic and a paper 
version. We have appended to this release the paper version, which 
will only be filed by advisers that have received a continuing 
hardship exemption. The electronic version of the form, which will 
be available only through the IARD, will elicit the same information 
but will have minor differences necessary to reflect and, in some 
cases take advantage of, an electronic environment.
    \36\ Part 1B was prepared by NASAA on behalf of state securities 
authorities. Completion of this part of Form ADV is a requirement of 
state law (and not SEC rules).
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    Many of the commenters on Part 1A requested technical changes or 
suggested that we clarify some of the language. These comments have led 
us to make several minor changes to the Instructions, Glossary of 
Terms,\37\ and Items\38\ that we believe improve the form. The most 
significant changes we proposed to Part 1A involved Item 11, which 
requires disclosure of disciplinary information about the adviser and 
certain of its advisory personnel. We are adopting this item 
substantially as proposed with one change urged by commenters.
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    \37\ We deleted terms that would have been used only in new Part 
2 and added a definition of ``employee,'' which is used in Item 5. 
As noted, infra note 38, we omitted the reference to ``independent 
contractors'' in Item 5 because the term could be construed to 
include persons who did not provide advice on the adviser's behalf. 
Instead, the item relies on the defined term ``employee,'' which 
inlcudes independent contractors that perform advisory functions on 
behalf of the adviser. In addition, we modified the definitions of 
``advisory affiliate'' and ``related person,'' which are used in 
Items 7, 8, 9, and 11. These modifications do not change from 
current Form ADV the persons and firms that are ``advisory 
affiliates'' and ``related persons'' of advisers; the modifications 
only clarify the definitions.
    \38\ We have revised (i) Item 1.I to clarify which web addresses 
must be provided on Schedule D; (ii) Item 5 to delete references to 
``independent contractors''; (iii) Item 5.B.(3) to ask only for the 
number of solicitors that are not employees of the adviser; and (iv) 
Item 7 to ask whether the adviser or a related person is a general 
partner of a limited partnership or a manager of a limited liability 
company and to limit the item to investment-related limited 
partnerships and investment-related limited liability companies.
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    Item 11 requires that each adviser responding affirmatively to a 
disciplinary question complete a Disclosure Reporting Page (DRP). Part 
1A has three DRPs, one each for criminal, civil, and regulatory 
actions. Advisers must complete a separate DRP for each reported event; 
the DRPs elicit details regarding the disciplinary events in a 
structured format and replace current Schedules D and E. Item 11 
includes an expanded list of disciplinary events that must be reported 
on a DRP. Advisers must now report actions of foreign courts and 
regulatory authorities,\39\ cease-and-desist orders issued by the 
Commission,\40\ and military court convictions, misdemeanor perjury 
convictions, and convictions for conspiracy to commit certain 
offenses.\41\ Advisers must only report disciplinary events occurring 
within the last ten years,\42\ and, by checking a box on the 
appropriate DRP, advisers can remove from their current Form ADV 
disciplinary events reported for advisory affiliates no longer 
associated with the firm.
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    \39\ Items 11.A, 11.B, and 11.D of Part 1A.
    \40\ Item 11.C(5) of Part A.
    \41\ Item 11.A.(1) and 11.B. These changes further conform Form 
ADV's disciplinary questions to those of Form BD. See Form BD 
Amendments, Securities Exchagne Act Release No. 35224 (Jan. 12, 
1995) [60 FR 4040 (Jan. 19, 1995)] (proposing), and Form BD 
Amendments, Securities Exchange Act Release No. 37431 (July 12, 
1996) [61 FR 37357 (July 18, 1996)] (adopting). Advisers need not 
report a finding by a self-regulatory organization that the adviser 
violated a ``minor'' rule if the sanction imposed consists of a fine 
of $2,500 or less and the sanctioned person does not contest the 
fine. Item 11.E.(2). See Securities Exchange Act Release No. 30958 
(July 27, 1992) [57 FR 34028 (July 31, 1992)] (making a similar 
change to Form BD). The rule must have been designated as ``minor'' 
under a plan approved by the Commission.
    \42\ Each DRP contains a box where the adviser can indicate that 
the DRP should be removed from the ADV record because the event or 
proceeding occurred more than ten years ago. Checking this item will 
remove the DRP from the adviser's current Form ADV. The ten-year 
limit applies only to disciplinary information required by Item 11 
of Part 1A. Under the Advisers Act's anti-fraud rules, advisers may 
be required to inform clients about disciplinary events that 
occurred more than ten years ago. See rule 206(4)-4(a)(2) [17 CFR 
275.206(4)-4(a)(2)]. In addition, state securities authorities will 
continue to require state-registered advisers to report some events 
that are more than ten years old.
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    We proposed to expand the current requirement that advisers report 
certain pending criminal proceedings to require disclosure of any 
felony charges, and certain misdemeanor charges, brought against the 
adviser or an advisory affiliate during the preceding ten years. Many 
commenters opposed this change, pointing out that it would require 
disclosure even when the charges were later dropped or the person 
acquitted. We have decided to require SEC-registered advisers to 
disclose only pending charges, as currently required by the form.\43\
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    \43\ Each DRP contains a box where the adviser can indicate that 
the DRP should be removed from the adviser's current Form ADV if the 
``pending'' event is no longer pending because it was resolved in 
the adviser's or the advisory affiliate's favor. The state 
securities authorities have decided to require state-registered 
advisers to report criminal charges.
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2. Part 2 of Form ADV
    As noted above, we are deferring adoption of amendments to Part 2 
of Form ADV. Deferment will allow us time to fully consider the many 
comments we received on our proposed revisions to Part II. We have left 
the (old) form, Part II, in place and are also retaining the current 
rules on delivery of old Part II. As a result, advisers must continue 
to provide prospective clients with (old) Part II of Form ADV or a 
brochure containing at least the same required information.\44\ 
Advisers also must maintain an updated copy of their (old) Part II in 
their files, and must provide it to the Commission staff upon request. 
However, we are not requiring advisers to submit these documents to us 
until we have acted on the Part 2 amendments and the IARD is ready to 
accept (new) Part 2 brochures electronically.\45\ We will notify 
advisers when the IARD is ready and will provide a grace period before 
advisers are required to file (new) Part 2 brochures.
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    \44\ Rule 204-3. Sponsors of wrap fee programs must also 
continue to prepare and deliver (and offer) wrap fee brochures in 
accordance with rule 204-3 and Schedule H of Form ADV.
    \45\ Rules 203-1(b)(2) and 204-1(c).
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    A consequence of our decision not to require an adviser to submit 
its old Part II of Form ADV to us during this interim period is that 
our updating requirements will no longer apply.\46\ However, under the 
Advisers Act's anti-fraud rules, advisers are prohibited from 
materially misleading their clients, and thus have an obligation not to 
provide their clients with a materially misleading Part II or 
brochure.\47\ Therefore, even though our updating rules may no longer 
apply, an adviser continues to have an obligation to update the 
disclosure it provides to clients to avoid misleading them.\48\
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    \46\ Currently, the updating requirements appear in the text of 
rule 204-1, and specify that an adviser is required to amend its 
Form ADV if any response to old Part II becomes materially 
inaccurate. Rule 204-1(b)(1). Today's amendments, however, remove 
most of those requirements from rule 204-1 to Form ADV itself. Rule 
204-1(a)(2), as amended, [17 CFR 275.204-1(a)(2)]. The updating 
requirements contained in Form ADV, as we are adopting it today, 
apply to new Part 1A but not old Part II. The Form ADV instructions 
do not address updating Part 2.
    \47\ Section 206 [15 U.S.C. 80b-6]
    \48\ See Note to paragraph (b)(2) of rule 203-1 and Note to 
paragraph (c) of rule 204-1.
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II. Effective Date

    The effective date for the rules and rule amendments is October 10, 
2000. Under the Administrative Procedure Act, we may establish an 
effective date less than 30 days after the publication of these rules 
if we find good cause to do so.\49\ Mandatory filing through the IARD 
system will not begin until January 1, 2001. Until January 1, 2001,

[[Page 57442]]

the rules will only affect the approximately 100 advisers that have 
volunteered to participate in the IARD's pilot program and submit their 
Form ADV through the system before mandatory filing begins. Due to the 
voluntary nature of use of the new system until January 1, 2001, no 
investment advisers will be disadvantaged by effectiveness of these 
rules with less than 30 days' notice.
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    \49\ 5 U.S.C. 553(d)(3).
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III. Cost-Benefit Analysis

    In the Proposing Release, we carefully analyzed the costs and 
benefits of our proposals and requested comment and data regarding the 
costs and benefits of the rule and form amendments on individual 
advisers and on the industry as a whole. As noted above, most 
commenters strongly favored electronic filing and several asserted that 
electronic filing would result in efficiencies and would ease the 
regulatory burden on advisers. Others, however, disagreed with our 
cost-benefit analysis in the Proposing Release, and felt that the 
benefits of electronic filing would not justify the overall costs.\50\
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    \50\ All of the commenters disagreeing with our cost-benefit 
analysis raised concerns with our proposed revisions to advisers' 
disclosure requirements. As discussed earlier, we are not adopting 
those proposals at this time. One commenter suggested that the cost 
savings of one-stop filing would be $100 or less per adviser, and 
would therefore be outweighed by the IARD filing fees.
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    After reviewing the comments, and evaluating information about the 
potential costs and benefits that has come to our attention since we 
proposed these rules, we have concluded that the benefits of electronic 
filing and the related rule amendments justify their costs.
     Costs. The amendments implement electronic filing through 
the IARD. As we discussed in the Proposing Release, electronic filing 
will impose certain costs on advisers. Advisers will need to become 
familiar with the IARD and will pay filing fees to NASDR. Since we 
published our proposals, we have approved NASDR's schedule of filing 
fees, and the costs our rules will impose on advisers have become 
clearer. Annual filing fees will range from $100 for advisers with less 
than $25 million of assets under management to $550 for advisers with 
more than $100 million of assets under management. We estimate that 
advisers registered with us will annually pay $2.5 million in filing 
fees.
    The amendments revise Forms ADV and ADV-W. We believe SEC-
registered advisers will experience few additional costs in completing 
revised Part 1. The only additional information that new Part 1A 
requires is information that should be readily available to an adviser. 
We do not believe the revisions to Form ADV-W impose additional costs 
on advisers.
     Benefits. We believe that electronic filing will yield 
substantially greater benefits to advisers and to investors, including 
allowing us to establish the public access system that Congress 
mandated in NSMIA.\51\
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    \51\ Section 306 of NSMIA, supra, note 16.
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    Electronic filing will eliminate many costs advisers currently 
incur in filing their Form ADV. Today, advisers must prepare 
registration materials on paper, copy them, and submit the paper copies 
to both the SEC and states. Many of these paper copies must be manually 
signed and notarized. Correcting a mistake requires the adviser to 
repeat the entire process. The IARD, in contrast, will permit the 
adviser to satisfy all of its filing obligations by submitting a single 
electronic filing prepared using a personal computer in its office. On 
the IARD, an adviser will be able to correct mistakes by simply typing 
over incorrect information and re-sending the electronic 
submission.\52\ Today, advisers must determine the amount of filing 
fees due to each state, prepare checks and mail them so that they are 
delivered in a timely manner.\53\ Errors can result in penalties or 
cause disruptions in business. The IARD, in contrast, will eliminate 
these costs by automatically determining the amount of filing fees owed 
and debiting the adviser's account when those fees are due. We believe 
these benefits will justify the filing fees and other expenses for 
advisers registered with the Commission.\54\
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    \52\ The IARD will also benefit advisers by preventing them from 
making incomplete filings. Submitting an incomplete filing is a 
common error by new advisers applying for registration, and is one 
that can substantially delay the registration process and thus the 
business plans of applicants.
    \53\ Postage expenses alone can cost an SEC-registered firm $750 
per year. This estimate assumes an average overnight mail cost of 
$10 per mailing in each of 50 states and an average of 1.5 
amendments filed per year ($10  x  50  x  1.5)=$750.
    \54\ We recognize that not every adviser will experience net 
cost savings from one-stop electronic filing. In several areas, such 
as the sliding filing fee scale, we have recognized that some larger 
advisers may benefit more from using the IARD than other, smaller 
firms. In balancing the costs and benefits of the amendments we are 
adopting today, we must look at the expected costs to all SEC-
registered firms, and we must also consider the benefits to 
investors.
---------------------------------------------------------------------------

    Revised Form ADV and the IARD system also benefit advisers by 
offering additional ways to reduce costs. An adviser may save a 
partially completed form as a ``draft'' that the adviser can access and 
complete at a later time. An on-line glossary allows advisers' 
personnel to refer to explanations of key terms while completing Form 
ADV, and an on-line ``help'' function answers frequently-asked 
questions and provides guidance on completing the form.\55\ When an 
adviser prepares an amendment to its Form ADV, the IARD will fill in 
most of the items from the adviser's previous IARD filings, reducing 
the adviser's time (and therefore expense) in completing the amendment. 
Further, the IARD will allow advisers that also are registered as 
broker-dealers to complete schedules to their Form ADV by ``linking'' 
to parallel responses in their Form BD already on file.\56\ These firms 
should recognize additional cost savings by avoiding entering certain 
data twice.
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    \55\ See discussion of electronic filing help features supra at 
Section 1.B.5 of this Release.
    \56\ Approximately 900 SEC-registered advisers also are 
registered with us as broker-dealers.
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    We have adopted a continuing hardship exemption, considering that 
not all advisers may have Internet access. We have provided the 
exemption for advisers that are small businesses and are unable to file 
through the IARD without undue burden and expense.\57\
---------------------------------------------------------------------------

    \57\ See discussion of hardship exemptions supra at Section 
1.B.3 of this Release.
---------------------------------------------------------------------------

    The IARD also has the potential to speed the registration process 
for investment adviser representatives of SEC-registered advisers. 
Registration of investment adviser representatives on the IARD will be 
a matter for state securities authorities; we do not register or 
license investment adviser representatives. Our experience with the CRD 
system, however, provides an analogy. Our understanding of how broker-
dealer agent filings on the CRD system are processed suggests that 
electronic filings on the IARD for investment adviser representatives 
are likely to be more efficient and cost effective than the current 
system of paper filings.
    Electronic filing also will produce substantial benefits for 
investors. First, and most important, the information on these filings 
will be available for investors to view, quickly and without cost, on a 
web site.\58\ Investors will be able to determine, for example, whether 
a prospective adviser has reported disciplinary events, what types of 
fees it charges, and whether the types of advisory services it offers 
are designed to meet their needs. As a result,

[[Page 57443]]

investors--clients and potential clients--will be in a better position 
to make informed decisions.
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    \58\ Investment adviser information is publicly available from 
us, but until now we have been unable to provide this information to 
the public without charge. We currently charge $.24 per page for 
copies and, upon receipt of the required fee, mail the Form ADV to 
the requester.
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    The added ``sunlight'' the web disclosure will shine on advisers 
may have additional, secondary benefits. Information from advisers' 
filings will be available through a web site, and easy availability of 
information about advisers and advisory affiliates may, for example, 
discourage advisers from engaging in certain practices or hiring 
certain persons (such as those with a disciplinary history or limited 
qualifications). Facilitating investors' access to information may also 
result in greater competition among advisers, which may in turn lower 
prices or encourage the development of different fee structures or 
different kinds of services that may benefit clients. These types of 
benefits are difficult to isolate or to quantify, but our experience is 
that they are real and are often the result of better disclosure.
    Electronic filing will also give us better access to information 
about advisers to administer our regulatory programs. We expect this 
information will permit us to increase both the efficiency and 
effectiveness of our programs and thus increase investor protection. 
The IARD will permit us to better monitor advisers' failure to make 
required filings, identify advisers whose activities suggest a need for 
closer scrutiny, and manage our regulatory programs. The IARD will 
generate reports on the industry, its characteristics and trends. These 
reports will help us anticipate regulatory problems, allocate and 
reallocate our resources, and more fully evaluate and anticipate the 
implications of various regulatory actions we may consider taking.
    The revisions to Form ADV are also likely to benefit advisers. We 
have re-drafted Part 1A in plain English, improved its organization, 
and added instructions to clarify some items. The revised schedules 
make it much simpler for an adviser to provide information about its 
control persons.\59\ While smaller advisers may find these benefits 
limited, larger advisers (particularly advisers that are part of a 
larger, more intricate corporate structure) should see cost savings 
from the changes. The new Disclosure Reporting Pages (DRPs) require 
substantially more detailed information about disciplinary events than 
is specified in the current form, but the DRPs should serve mainly to 
clarify existing disclosure obligations, which are worded more 
generally.\60\ Moreover, we are only requiring advisers to report 
disciplinary events occurring in the past ten years,\61\ and have 
removed information about the educational and business background of 
employees. We believe these changes will justify any additional costs 
associated with amendments to Part 1A.
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    \59\ An adviser generally will no longer be required to report 
an indirect owner unless the indirect owner own 25% of a direct 
owner. See Section II.D.1 of the Proposing Release, supra note 1.
    \60\ Moreover, most advisers do not have disciplinary events to 
report.
    \61\ See discussion of disciplinary disclosure requirements 
supra at Section C.1 of this Release. As discussed earlier, we also 
are no longer requiring advisers to report unsatisfied judgments or 
liens; bankruptcies; bond denials, payouts, or revocations; or any 
``minor'' rule violations.
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    Advisers will also benefit from the revisions to Form ADV-W. In 
amended Form ADV-W, the adviser must complete only those items needed 
to process its withdrawal. Form ADV-W will also become effective 
immediately, rather than after a sixty-day ``waiting period,'' thereby 
smoothing the transition period for advisers switching to state 
registration.

IV. Paperwork Reduction Act

    As explained in the Proposing Release, the rule and form amendments 
(including new rule 203-3 and new Form ADV-H) that we are adopting 
today contain several ``collection of information'' requirements within 
the meaning of the Paperwork Reduction Act of 1995. In the Proposing 
Release, the Commission published notice soliciting comment on the 
collection of information requirements. The Commission submitted the 
collection of information requirements to the Office of Management and 
Budget (``OMB'') for review in accordance with 44 U.S.C. 3507(d) and 5 
CFR 1320.11.\62\ An agency may not conduct or sponsor, and a person is 
not required to respond to, a collection of information unless it 
displays a currently valid control number. To correct an error in the 
proposed collection of information for Form ADV, the Commission has 
submitted a PRA change worksheet to OMB. Modifications made to the 
amendments as proposed do not affect the collection of information.
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    \62\ 44 U.S.C. 3501 to 3520. The titles for the collections of 
information are ``Form ADV''; ``Rule 203-2 and Form ADV-W''; ``Rule 
203-3 and Form ADV-H''; and ``Rule 0-2 and Form ADV-NR,'' all under 
the Advisers Act. OMB approved the collection of information 
requirements, and the OMB control numbers are as follows: Form ADV, 
3235-0049 (expires Jun. 30, 2003); Rule 203-2 and Form ADV-W, 3235-
0313 (expires Jun. 30, 2003); Rule 203-3 and Form ADV-H, 3235-0538 
(expires Jun. 30, 2003); and Rule 0-2 and Form ADV-NR, 3235-0240 
(expires Jun. 30, 2003).
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    We use the information we require from advisers to determine 
eligibility for registration with us, as well as in managing our 
regulatory, examinations, and enforcement programs. The information 
will also form a database, easily accessible to investors, about 
advisers and their personnel.

Form ADV

    As amended, rule 203-1 requires every applicant for investment 
adviser registration with the Commission to file Form ADV through the 
IARD. Rule 204-1 requires each registered adviser to file amendments to 
Form ADV through the IARD at least annually,\63\ and requires currently 
registered advisers to transition to the IARD and the revised form. We 
expect the efficiencies of filing through the IARD to, over time, 
reduce the initial burdens associated with completing the revised Form 
ADV.
---------------------------------------------------------------------------

    \63\ As discussed in the Proposing Release, revised Part 1A of 
Form ADV incorporates the collection of information that previously 
appeared in Schedule I to Form ADV.
---------------------------------------------------------------------------

    The total burden for all advisers filing current Form ADV is 19,448 
hours.\64\ There are currently approximately 8,100 advisers registered 
with us, and, based on recent experience, the Commission staff has now 
estimated that each year we receive approximately 1,000 new 
applications for registration as an adviser. As discussed in the 
Proposing Release, this increase in the number of respondents has 
increased the collection of information by 3,703 hours, independent of 
today's amendments.\65\
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    \64\ The current burden assumes there would be 760 new 
applicants per year, and an average of 9.01 hours for a new 
registrant to complete the form. The current burden also assumes 
that 7,300 other advisers are registered with us, and assumes that 
advisers file an aggregate of 11,810 amendments with us annually, at 
an average of 1.07 hours per amendment.
    \65\ The 3,703 hours represents an increase independent of 
today's amendments. We receive approximately 1,000 (not 760) new 
applications annually; and we have approximately 8,100 (not 7,300) 
advisers registered with us. [(240 more new registrants per year  x  
9.01 hours) + [(800 more currently-registered advisers  x  1.5 
amendments) + (240 new applicants  x  1 amendment)]  x  1.07 hours = 
3,703 hours.]
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    The revised burden estimate for the collection of information on 
Form ADV reflects the amendments to the form as well as the requirement 
that currently-registered advisers re-file their Form ADV 
electronically in order to transition to use of the revised form and 
IARD system. The revised collection of information also incorporates 
the burden of current Schedule I to Form ADV.\66\
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    \66\ The collection of information for amended Form ADV also 
incorporates the burden of rule 206(4)-4, which requires advisers to 
disclose financial and disciplinary information to clients and 
prospective clients. The current burden does not include these 
separately existing 6,755 burden hours per year. In the Proposing 
Release, we proposed to incorporate the requirements of rule 206(4)-
4 into Part 2 of Form ADV and to withdraw the rule. As discussed 
above, however, we are deferring adoption of those proposals until 
later this year.

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[[Page 57444]]

    The Commission staff had estimated an average burden increase for 
Form ADV of 1.47 hours per adviser per year for a 15-year period.\67\ 
This burden increase reflected new registrants' filings of revised Form 
ADV as well as currently-registered advisers' IARD transition filings. 
Several commenters expressed concerns that the estimates for initial 
completion of revised Form ADV were too low, particularly for large 
firms.\68\ The estimated hours are averages that take into 
consideration small advisers as well as those with thousands of 
employees.
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    \67\ As discussed in the Proposing Release, to estimate the 
annual burden associated with revised Form ADV, we amortized the 
burden of an adviser's initial preparation and filing of Form ADV 
over a 15-year period, which reflects the expected useful life of 
the revised form. After its initial filing of Form ADV through the 
IARD (whether as a new registrant or for an existing registrant re-
filing to transition to the system), an adviser's burden will 
generally be limited to amending the form as needed.
    \68\ Many of the concerns centered on proposed Parts 2A (the 
adviser's narrative firm brochure) and 2B (brochure supplements for 
advisory personnel). As discussed earlier, we are deferring adoption 
of those proposals at this time.
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    The Commission has submitted a PRA change worksheet to OMB to 
correct an error in the collection of information, which error may have 
contributed to commenters' concerns. The increase in burden due to the 
amendments was presented as the total burden of the collection of 
information, omitting reference to the current burden to which the 
incremental hours were added.
    As discussed in the Proposing Release, the Commission staff has 
estimated that advisers will file a total of 13,250 Form ADV amendments 
with us each year.\69\ We anticipate that electronic filing will reduce 
the information collection burden of filing an amendment to Form ADV by 
approximately thirty percent,\70\ and the estimated burden for Form ADV 
amendments is 9,938 hours per year.\71\
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    \69\ As discussed in the Proposing Release, based on the 
Commission's recent experience it is estimated that, each year, 890 
new registrants and 10 multi-state advisers (i.e., advisers relying 
on the multi-state exemption found at rule 203A-2(e) [17 CFR 
275.203A-2(e)]) will each amend their Form ADV 1 time; 100 advisers 
relying on rule 203A-2(d)[17 CFR 275.203A-2(d)] will each amend 
their Form ADV 2 times; and 8100 currently-registered advisers will 
amend their Form ADV, on average, 1.5 times.
    \70\ The revised collection of informatioin burden per amendment 
is 0.75 hours (current burden per amendment of 1.07 hours  x  .70 = 
.749 hours per amendment).
    \71\ 13,250 responses  x  0.75 hours = 9,937.5 hours.
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    The collection of information burden due to rulemaking for advisers 
to file and complete the revised Form ADV is approximately 23,315 hours 
per year.\72\ The total increase in the collection of information 
burden therefore is 27,018 hours,\73\ and the total collection of 
information burden for Form ADV is therefore 46,466 hours.\74\
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    \72\ 9,938 hours attributable to amendments + (1,000 new 
registrants  x  1.47 (amortized) hours) = 23,315 hours.
    \73\ 23,315 hours due to rulemaking + 3,703 hours due to an 
increase in the number of advisers = 27,018 total burden hours.
    \74\ 19,448 + 27,018 = 46,466.
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    This collection of information appears at 17 CFR 275.203-1, 
275.204-1, and 279.1. Responses are not kept confidential. The 
information collection requirements are required for all advisers 
registered with us or applying for registration after January 1, 2001.

Form ADV-W and Rule 203-2

    The Commission is amending rule 203-2 to (i) require advisers to 
file Form ADV-W through the IARD and (ii) make adviser withdrawals 
effective upon filing.\75\ The Commission is also amending Form ADV-W 
to permit advisers filing for ``partial withdrawals'' to omit certain 
items that we do not need from an adviser continuing in business as a 
state-registered adviser. The Commission staff has estimated that 
approximately 50 percent of advisers filing for withdrawal will file 
for full withdrawal, incurring a burden of approximately 0.75 hours (45 
minutes) per response, and the remaining 50 percent will file for 
partial withdrawal, incurring a burden of approximately 0.25 hours (15 
minutes) per response. The weighted average total time for each 
respondent to complete Form ADV-W as amended is estimated to be 0.5 
hours (30 minutes), a decrease from the one hour required for the 
current form. Based on the Commission's recent experience in processing 
investment adviser withdrawals, however, the Commission staff has 
estimated that approximately 1,300 advisers withdraw from SEC 
registration each year, which is an increase from the current 
burden.\76\ The total collection of information burden is estimated to 
be 650 hours.\77\
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    \75\ Rule 203-2 currently provides for a 60-day wait before a 
withdrawal is effective.
    \76\ The Commission in the past received approximately 616 
notices of withdrawal on Form ADV-W per year.
    \77\ (650 advisers filing for full withdrawal  x  .75 hours) + 
(650 advisers filing for partial withdrawal  x  .25 hours) = 487.5 
+162.5 = 650 hours. This represents a net increase from the current 
burden of 616 hours, which was based on 616 respondents and one hour 
per response.
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    This collection of information is found at 17 CFR 275.203-2 and 17 
CFR 279.2. Responses are not kept confidential. The information 
collection requirements are required for all advisers registered with 
the Commission once the transition period to electronic filing is 
complete.

Rule 0-2 and Form ADV-NR

    The Commission is amending rule 0-2, adding Form ADV-NR, and 
deleting Forms 4-R, 5-R, 6-R and 7-R. Rule 0-2 permits service of 
process on non-resident advisers and on non-resident general partners 
or managing agents of advisers by service on their agents. The amended 
Form ADV execution page for non-resident advisers incorporates the 
substance of Forms 4-R through 6-R, and designates the Secretary of the 
Commission, among others, as the adviser's agent for service of 
process; accordingly, the paperwork burdens of Forms 4-R through 6-R 
have been incorporated into the collection of information requirements 
for Form ADV, discussed above. The substance of Form 7-R is contained 
in new Form ADV-NR. Form ADV-NR designates the Secretary of the 
Commission, among others, as the non-resident general partner's or 
managing agent's agent for service of process.
    The Commission staff has estimated that approximately 380 
respondents each year will be subject to rule 0-2. Of these, 
approximately 285 respondents will be non-resident advisers that will 
now comply with rule 0-2 simply by executing Form ADV. The remaining 95 
respondents will be non-resident general partners or managing agents of 
SEC-registered investment advisers, and must file Form ADV-NR with the 
Commission.\78\ The staff has estimated that preparing and filing Form 
ADV-NR will continue to require approximately one hour of the non-
resident general partner's or managing agent's time.\79\ The total 
estimated burden therefore is 95 hours.
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    \78\ A non-resident general partner or managing agent is 
required to file Form ADV-NR only once.
    \79\ One hour is the current burden for a response to Form 4-R, 
5-R, 6-R or 7-R.
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    This collection of information is found at 17 CFR 275.0-2 and 17 
CFR 279.4. Responses are not kept confidential. The information 
collection requirements are required for each non-resident adviser, and 
for each non-resident general partner or managing agent of any SEC-
registered adviser.

Rule 203-3 and Form ADV-H

    We are adopting new rule 203-3 and new Form ADV-H. Rule 203-3 
requires advisers requesting either a temporary or continuing hardship 
exemption to

[[Page 57445]]

submit the request on Form ADV-H. An adviser requesting a temporary 
hardship is required to file Form ADV-H, providing a brief explanation 
of the nature and extent of the temporary technical difficulties. Form 
ADV-H requires an adviser requesting a continuing hardship exemption to 
indicate the reasons the adviser is unable to submit electronic filings 
without undue burden and expense.\80\ A continuing hardship exemption 
will be available only to an adviser that is a small entity.\81\
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    \80\ See Form ADV-H in Appendix C of this Release. The adviser 
applying for a continuing hardship exemption also must indicate the 
reasons that the hardware and software needed for Internet access 
are unavailable, and propose a time period for which the exemption 
would be in effect.
    \81\ Rules 203-3 and 0-7.
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    Commission records indicate that approximately 1,500 SEC-registered 
advisers are small entities. There are, therefore, approximately 1,500 
potential respondents that could apply for a continuing hardship 
exemption, and approximately 8,100 potential respondents that could 
apply for a temporary hardship exemption.\82\ The Commission staff has 
estimated that, each year, 50 advisers will request a temporary 
hardship exemption and 20 will apply for a continuing hardship 
exemption. Form ADV-H and rule 203-3 have been estimated to create a 
collection of information burden of approximately 60 minutes per 
respondent, for a total of 70 hours.\83\ This collection of information 
is found at 17 CFR 275.203-3 and 17 CFR 279.3. Responses are not kept 
confidential. The information collection requirements are required only 
if the adviser seeks an exemption.
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    \82\ A temporary hardship exemption would be available to 
advisers that submit electronic filings but are temporarily unable 
to do so. An adviser using a continuing hardship exemption could not 
apply for a temporary hardship exemption.
    \83\ (50  x  1) + (20  x  1) = 50 + 20 = 70 hours.
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V. Summary of Final Regulatory Flexibility Analysis

    We have prepared a Final Regulatory Flexibility Analysis (FRFA) in 
accordance with section 3(a) of the Regulatory Flexibility Act (RFA) 
\84\ regarding the amendments to Form ADV and other rules and forms 
under the Advisers Act. We prepared an Initial Regulatory Flexibility 
Analysis (IRFA) in conjunction with the Proposing Release and made it 
available to the public. We received no comments specifically on the 
IRFA.
---------------------------------------------------------------------------

    \84\ 5 U.S.C. 603(a).
---------------------------------------------------------------------------

A. Need for the Rule and Form Amendments

    As discussed in more detail in the FRFA, and above, the rule and 
form amendments \85\ are necessary to: (i) Facilitate the development 
of a system of electronic filing by investment advisers; (ii) update 
the registration forms for advisers to reflect recent legislative and 
regulatory developments; and (iii) develop a database of information 
about advisers that is easily accessible to investors.
---------------------------------------------------------------------------

    \85\ References to ``rule and form amendments'' include new rule 
203-3 and new Form ADV-H.
---------------------------------------------------------------------------

B. Significant Issues Raised by Public Comment

    The Commission received 70 comment letters in response to the 
Proposing Release. The commenters generally supported the proposal, 
although some expressed concerns with specific provisions, and some 
suggested alternative approaches for addressing particular issues. As 
discussed above, the Commission has concluded that certain suggestions 
from commenters are appropriate and has adopted the rule and form 
amendments with changes to reflect those suggestions.
    The Commission specifically requested comment with respect to the 
IRFA. No comments were received specifically on the IRFA, but one 
commenter did urge the Commission to disregard any comments from 
Wyoming advisers if the commenters argued that the rule and form 
amendments would be burdensome. We did not receive any comments from 
Wyoming advisers. Some commenters, however, did address aspects of the 
proposed amendments that could potentially affect small businesses. The 
comments received concerning those issues are discussed below.

C. Small Entities Subject to the Rules

    In developing the rule and form amendments, we have considered 
their potential effect on small entities that may be affected, which is 
discussed in the FRFA. The rule and form amendments will not affect 
most advisers that are small entities \86\ (small advisers) because 
those advisers are registered with one or more state securities 
authorities rather than with us. Congress amended the Advisers Act in 
1996 so that small advisers generally are regulated by state regulators 
and not the Commission.\87\ Those small advisers that remain registered 
with us are located in Wyoming (which does not have an investment 
adviser statute), or are eligible for an exemption that permits SEC 
registration. Of the approximately 20,000 advisers in the United 
States, approximately 8,100 (approximately 40%) are registered with us. 
Of those 8,100, the FRFA estimates that approximately 1,500 
(approximately 18%) qualify as small advisers. We have based this 
estimate on registration information advisers file with the Commission.
---------------------------------------------------------------------------

    \86\ For purposes of the Advisers Act and the RFA, an investment 
adviser generally is a small entity if (a) it manages assets of less 
than $25 million reported on its most recent Schedule I to Form ADV, 
(b) it does not have total assets of $5 million or more on the last 
day of the most recent fiscal year, and (c) it is not in a control 
relationship with another investment adviser that is not a small 
entity. Rule 0-7.
    \87\ Title III of NSMIA, supra note 16.
---------------------------------------------------------------------------

D. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    The FRFA states that the rule and form amendments impose certain 
reporting and compliance requirements on small advisers, requiring them 
(i) to file electronically through the IARD and (ii) to use amended 
Form ADV when applying for registration (or amending an existing 
registration). These requirements are discussed more fully in the FRFA 
and Section II of the Proposing Release, and the burdens on small 
advisers are discussed below.
1. Electronic Filing Requirements
    The FRFA explains that electronic filing is likely to impose two 
types of burdens on small advisers--filing fees and the time and 
expense of familiarizing themselves with the system.
    Filing Fees. The IARD system operator will charge filing fees to 
all advisers, including small advisers.\88\ Small advisers will pay 
substantially smaller fees than larger advisers. This sliding scale is 
designed to minimize the burdens of electronic filing on small advisers 
while maintaining the economic viability of the IARD. It also 
recognizes that larger advisers, which are more likely to have filing 
requirements in multiple states, will benefit more from the IARD than 
small advisers.
---------------------------------------------------------------------------

    \88\ Section 203A(d) of the Advisers Act [15 U.S.C. 80b-3A(d)] 
authorizes us to designate NASDR as operator of the filing system, 
and to require that advisers file through the system and pay filing 
fees. The rules we are adopting will require advisers to use the 
system and pay filing fees to NASDR, but do not themselves impose or 
authorize NASDR to impose any filing fee on advisers using the IARD. 
Nonetheless, we have included these filing fees as part of our FRFA. 
In Investment Advisers Act Release No. 1888, supra note 5, we 
designated NASDR as operator of the IARD and approved NASDR's 
proposed filing fees.
---------------------------------------------------------------------------

    Other Burdens. The FRFA explains that, to use the IARD, small 
advisers

[[Page 57446]]

must also establish an account with NASDR, familiarize themselves with 
the IARD's filing rules, and obtain Internet access if they do not 
already have it. We believe that these burdens are small and that 
advisers will incur most of the costs when they first begin to use the 
IARD. Thereafter, using the IARD should actually reduce regulatory 
burdens for all advisers, including small advisers.
    Our information suggests that almost all investment advisers, 
including small advisers, currently have Internet access, and use the 
Internet for various purposes.\89\ Nonetheless, our rule and form 
amendments provide for a continuing hardship exemption, available only 
to small advisers. The exemption will permit the adviser to continue 
submitting paper filings if using the IARD would impose an 
``unreasonable burden or expense.'' \90\ The operator of the IARD will 
convert the paper filing to electronic format and charge the adviser an 
additional fee to cover conversion costs. The IARD will also 
accommodate advisers' use of commercial filing service bureaus, which 
we understand many small advisers currently use to make regulatory 
filings. We have included these alternative means of making filings to 
minimize the burdens the electronic filing rules will have on small 
advisers.
---------------------------------------------------------------------------

    \89\ A 1998 industry survey of registered investment advisers 
noted that all respondents use the Internet. According to the 
survey, advisers ``new to the business or those with less than $100 
million of assets under management are more active users of the 
online channel than are higher-net-worth [advisers].'' See Phil 
Clark, Cerrulli Survey; Advisers Flock to Internet for Research and 
Fund Data, Fund Marketing Alert, July 6, 1998 at 1. In 1999, the 
Institute of Certified Financial Planners (ICFP) and Morningstar 
also conducted a survey of financial planners and found that 99% of 
those surveyed had Internet access. See ICFP/Morningstar, Work/
Computer Environment Among RIAs (available in File No. S7-10-00). 
Those advisers that cannot submit electronic filings themselves can 
obtain the assistance of a filing service bureau--a firm that 
provides assistance to advisers and broker-dealers in preparing and 
making regulatory filings. For advisers' convenience, we will 
maintain a list of service bureaus that offer assistance in making 
filings on the IARD system.
    \90\ See Form ADV-H, infra Appendix C of this Release.
---------------------------------------------------------------------------

    Many small advisers today use filing services because they cannot 
hire professional compliance staff, and do not themselves have the 
knowledge, time, or expertise to understand the details of the various 
federal and state forms, deadlines, and fees. The IARD will have a 
number of features designed to make it easy to complete Form ADV, even 
if the user is unfamiliar with the form. We have written the new 
instructions in plain English and reorganized the form in a simpler 
manner. We have re-drafted questions that previously presented 
interpretive difficulties for small advisers, and have provided for an 
on-line ``help'' function that will provide easy access to answers to 
questions advisers frequently ask about the form. Advisers using the 
system will also have easy on-line access to the text of the Advisers 
Act and our rules. Together, these features should substantially 
benefit small advisers that may not have lawyers or other professional 
compliance personnel or staff.
    The FRFA concludes that, although small advisers will experience 
some modest start-up costs in using the IARD, over time the system will 
actually reduce overall costs. As advisers become more familiar with 
the IARD, use of the system should substantially reduce administrative 
costs associated with making regulatory filings, and improve advisers' 
compliance with regulatory requirements, allowing them to reduce their 
dependence, in more routine matters, on lawyers, compliance firms and 
others who assist them in meeting their regulatory obligations.
2. Amendments to Form ADV
    Part 1. The FRFA explains that the amendments to Part 1A of Form 
ADV should have a minimal effect on small advisers. None of the new 
items requests information that should not be readily available to the 
advisers. For example, advisers must provide the e-mail address of a 
contact person (if she has one), and the address of any web site the 
adviser sponsors. Further, because small advisers tend to have simpler 
business arrangements, fewer control persons, and fewer employees, the 
burdens of completing Part 1A should be significantly less for small 
advisers than for larger advisers.
    The FRFA acknowledges that small advisers whose control persons 
have disciplinary histories will likely spend more resources than other 
advisers in completing the necessary DRPs for reporting of disciplinary 
events. Based on information filed on current Form ADV, we estimate 
that only approximately 14% of advisers will be required to report 
disciplinary information, and thus most small advisers will be 
unaffected by this requirement.\91\
---------------------------------------------------------------------------

    \91\ The 14% estimate is based on responses to Item 11 of 
current Form ADV.
---------------------------------------------------------------------------

    Part 2. The Commission proposed significant amendments to Part 2 of 
Form ADV. These amendments would have imposed additional costs on 
advisers, including small advisers. The proposed amendments to Part 2 
would have required advisers to begin preparing and disseminating 
narrative brochures. The Commission has elected to defer adoption of 
Part 2 and related rules until a later date.

E. Agency Action To Minimize Effect on Small Entities

    The FRFA discusses the various alternatives that the Commission 
considered, in adopting the rule and form amendments, that might 
minimize the effect on small advisers, including (i) establishing 
different compliance or reporting requirements or timetables that take 
into account the resources available to small advisers; (ii) 
clarifying, consolidating, or simplifying compliance and reporting 
requirements for small advisers; (iii) using performance rather than 
design standards; and (iv) exempting small advisers from coverage of 
all or part of the amended rules and forms.
    Regarding the first alternative, the Commission considered 
establishing different compliance or reporting requirements for small 
advisers. As explained in the FRFA, establishing different compliance 
or reporting requirements would be inconsistent with our mandate to 
provide a system of public disclosure of investment adviser 
information. The FRFA states that a small adviser will, by the nature 
of its business, likely spend fewer resources in completing the new 
Form ADV, and will pay lower filing fees, than a larger adviser.
    Regarding the second alternative, it does not appear that the rules 
and forms can be formatted differently for small advisers and still 
achieve the stated objectives of the amendments. Nonetheless, the 
amendments clarify and simplify the form for all advisers, including 
small advisers. As discussed more fully in the FRFA, we are also adding 
a new item to Form ADV to identify small advisers so we can better 
assess the number of small advisers registered with us and the burdens 
our rules impose on them.
    Regarding the third alternative, the FRFA explains that the rules 
and forms would permit advisers to use performance rather than design 
standards in some instances. In other contexts, however, the use of 
performance rather than design standards would be inconsistent with our 
statutory mandate to protect investors, as advisers must provide 
certain registration information in a uniform and quantifiable manner 
so that it is useful to our regulatory and examination programs. Design 
standards, therefore, are necessary to

[[Page 57447]]

achieve many objectives of the amended rules and forms.
    Regarding the fourth alternative, the FRFA states that it would be 
inconsistent with the purposes of the Advisers Act to exempt small 
advisers from the amendments. As discussed, the information advisers 
file will form a publicly-accessible database, allowing investors to 
obtain information about, among other things, the disciplinary 
histories of an adviser and its personnel. Clients and potential 
clients of small advisers are entitled to obtain the same information, 
with the same ease, as those of larger advisers, and exempting small 
advisers from any of the rule and form amendments would be inconsistent 
with a central purpose of the Advisers Act.
    We have incorporated several features, such as the ``help'' 
function, intended to minimize the burden on small advisers. Small 
advisers can also apply for a continuing hardship exemption from the 
electronic filing requirements, as discussed above.
    The FRFA states that, having considered the above alternatives in 
the context of the proposed rule and form amendments, and after taking 
into account the resources available to small advisers and the 
potential burden the rule and form amendments could place on investment 
advisers, the alternatives, except as noted above, would not accomplish 
the stated objectives of the rule and form amendments.
    A copy of the FRFA is available for public inspection in File No. 
S7-10-00, and a copy may be obtained by contacting Jennifer Sawin, 
Special Counsel, Securities and Exchange Commission, 450 5th Street, 
NW., Washington, DC 20549-0506.

VI. Statutory Authority

    We are adopting new rule 203-3 under sections 203(c)(1) and 211(a) 
of the Investment Advisers Act of 1940 [15 U.S.C. 80b-3(c)(1) and 80b-
11(a)].
    We are amending rules 30-5 and 30-11 of our Organization and 
Program Management rules under sections 4A and 4B of the Securities 
Exchange Act of 1934 [15 U.S.C. 78d-1 and 78d-2].
    We are amending rule 0-2 under section 19(a) of the Securities Act 
of 1933 [15 U.S.C. 77s(a)], section 23(a) of the Securities Exchange 
Act of 1934 [15 U.S.C. 78w(a)], section 319(a) of the Trust Indenture 
Act of 1939 [15 U.S.C. 77sss(a)], section 38(a) of the Investment 
Company Act of 1940 [15 U.S.C. 78a-37(a)], and sections 203(c)(1), 204, 
and 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 80b-
3(c)(1), 80b-4, and 80b-11(a)].
    We are amending rule 0-7 under chapter 6 of title 5 of the United 
States Code (particularly section 601 of that chapter [5 U.S.C. 601]) 
and section 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 
80b-11(a)].
    We are amending rules 203-1 and 203-2 under sections 203(c)(1), 
204, and 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 80b-
3(c)(1), 80b-4, and 80b-11(a)].
    We are amending rule 203A-1 under sections 203A(a)(1)(A), 203A(c), 
and section 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 
80b-3a(a)(1)(A), 80b-3a(c), and 80b-11(a)].
    We are amending rule 203A-2 under section 203A(c) of the Investment 
Advisers Act of 1940 [15 U.S.C. 80b-3a(c)].
    We are amending rule 204-1 under sections 203(c)(1) and 204 of the 
Investment Advisers Act of 1940 [15 U.S.C. 80b-3(c)(1) and 80b-4].
    We are adopting new Form ADV-H under sections 203(c)(1), 204, and 
211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 80b-3(c)(1), 
80b-4, and 80b-11(a)].
    We are amending rule 279.1, Form ADV, under section 19(a) of the 
Securities Act of 1933 [15 U.S.C. 77s(a)], sections 23(a) and 28(e)(2) 
of the Securities Exchange Act of 1934 [15 U.S.C. 78w(a) and 
78bb(e)(2)], section 319(a) of the Trust Indenture Act of 1939 [15 
U.S.C. 77sss(a)], section 38(a) of the Investment Company Act of 1940 
[15 U.S.C. 78a-37(a)], and sections 203(c)(1), 204, and 211(a) of the 
Investment Advisers Act of 1940 [15 U.S.C. 80b-3(c)(1), 80b-4, and 80b-
11(a)].
    We are amending rule 279.2, Form ADV-W, under sections 203(c)(1), 
204, and 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 80b-
3(c)(1), 80b-4, and 80b-11(a)].
    We are amending rule 279.4, Form 4-R, by replacing it with Form 
ADV-NR under section 19(a) of the Securities Act of 1933 [15 U.S.C. 
77s(a)], section 23(a) of the Securities Exchange Act of 1934 [15 
U.S.C. 78w(a)], section 319(a) of the Trust Indenture Act of 1939 [15 
U.S.C. 77sss(a)], section 38(a) of the Investment Company Act of 1940 
[15 U.S.C. 78a-37(a)], and sections 203(c)(1), 204, and 211(a) of the 
Investment Advisers Act of 1940 [15 U.S.C. 80b-3(c)(1), 80b-4, and 80b-
11(a)].
    We are withdrawing rule 204-5 under section 211(a) under the 
Investment Advisers Act of 1940 [15 U.S.C. 80b-11(a)].
    We are removing and reserving rules 279.5, 279.6, and 279.7 and 
removing Forms 5-R, 6-R, and 7-R under section 19(a) of the Securities 
Act of 1933 [15 U.S.C. 77s(a)], section 23(a) of the Securities 
Exchange Act of 1934 [15 U.S.C. 78w(a)], section 319(a) of the Trust 
Indenture Act of 1939 [15 U.S.C. 77sss(a)], section 38(a) of the 
Investment Company Act of 1940 [15 U.S.C. 78a-37(a)], and sections 
203(c)(1), 204, and 211(a) of the Investment Advisers Act of 1940 [15 
U.S.C. 80b-3(c)(1), 80b-4, and 80b-11(a)].
    We are removing and reserving rule 279.9 and removing Form ADV-Y2K 
under section 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 
80b-11(a)].

List of Subjects

17 CFR Part 200

    Administrative practice and procedure, Authority delegations 
(Government agencies)

17 CFR Parts 275 and 279

    Reporting and recordkeeping requirements, Securities.

Text of Rule and Form Amendments

    For the reasons set out in the preamble, Title 17, Chapter II of 
the Code of Federal Regulations is amended as follows:

PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND 
REQUESTS

    1. The authority section for part 200 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77s, 78d-1, 78d-2, 78w, 78ll(d), 78mm, 79t, 
77sss, 80a-37, 80b-11, unless otherwise noted.
* * * * *

    2. In Sec. 200.30-5, the introductory text of paragraph (e) is 
revised and paragraph (e)(7) is added to read as follows:


Sec. 200.30-5  Delegation of authority to Director of Division of 
Investment Management.

* * * * *
    (e) With respect to the Investment Advisers Act of 1940 (15 U.S.C. 
80b-1 to 80b-22):
* * * * *
    (7) Pursuant to section 203A(d) of the Act (15 U.S.C. 80b-3a(d)), 
to set the terms of, and grant or deny as appropriate, continuing 
hardship exemptions under Sec. 275.203-3 of this chapter.
* * * * *

    3. Section 200.30-11 is amended by revising paragraph (b)(2) to 
read as follows:

[[Page 57448]]

Sec. 200.30-11  Delegation of authority to Associate Executive Director 
of the Office of Filings and Information Services.

* * * * *
    (b) * * *
    (2) Under section 203(h) of the Act (15 U.S.C. 80b-3(h)), to 
authorize the issuance of orders canceling registrations of investment 
advisers, or pending applications for registration, if such investment 
advisers or applicants for registration are no longer in existence or 
are not engaged in business as investment advisers.
* * * * *

PART 275--RULES AND REGULATIONS, INVESTMENT ADVISERS ACT OF 1940

    4. The general authority citation for part 275 is revised to read 
as follows:

    Authority: 15 U.S.C. 80b-2(a)(11)(F), 80b-2(a)(17), 80b-3, 80b-
4, 80b-6(4), 80b-6a, 80b-11, unless otherwise noted.
* * * * *

    5. Section 275.0-2 is revised to read as follows:


Sec. 275.0-2  General procedures for serving non-residents.

    (a) General procedures for serving process, pleadings, or other 
papers on non-resident investment advisers, general partners and 
managing agents. Under Forms ADV and ADV-NR [17 CFR 279.1 and 279.4], a 
person may serve process, pleadings, or other papers on a non-resident 
investment adviser, or on a non-resident general partner or non-
resident managing agent of an investment adviser by serving any or all 
of its appointed agents:
    (1) A person may serve a non-resident investment adviser, non-
resident general partner, or non-resident managing agent by furnishing 
the Commission with one copy of the process, pleadings, or papers, for 
each named party, and one additional copy for the Commission's records.
    (2) If process, pleadings, or other papers are served on the 
Commission as described in this section, the Secretary of the 
Commission (Secretary) will promptly forward a copy to each named party 
by registered or certified mail at that party's last address filed with 
the Commission.
    (3) If the Secretary certifies that the Commission was served with 
process, pleadings, or other papers pursuant to paragraph (a)(1) of 
this section and forwarded these documents to a named party pursuant to 
paragraph (a)(2) of this section, this certification constitutes 
evidence of service upon that party.
    (b) Definitions. For purposes of this section:
    (1) Managing agent means any person, including a trustee, who 
directs or manages, or who participates in directing or managing, the 
affairs of any unincorporated organization or association other than a 
partnership.
    (2) Non-resident means:
    (i) An individual who resides in any place not subject to the 
jurisdiction of the United States;
    (ii) A corporation that is incorporated in or that has its 
principal office and place of business in any place not subject to the 
jurisdiction of the United States; and
    (iii) A partnership or other unincorporated organization or 
association that has its principal office and place of business in any 
place not subject to the jurisdiction of the United States.
    (3) Principal office and place of business has the same meaning as 
in Sec. 275.203A-3(c) of this chapter.

    6. In Sec. 275.0-7, the introductory text of paragraphs (a) and (b) 
are republished and paragraphs (a)(1) and (b)(1) are revised to read as 
follows:


Sec. 275.0-7  Small entities under the Investment Advisers Act for 
purposes of the Regulatory Flexibility Act.

    (a) For purposes of Commission rulemaking in accordance with the 
provisions of Chapter Six of the Administrative Procedure Act (5 U.S.C. 
601) and unless otherwise defined for purposes of a particular 
rulemaking proceeding, the term ``small business'' or ``small 
organization'' for purposes of the Investment Advisers Act of 1940 
means an investment adviser that:
    (1) Has assets under management, as defined under Section 
203A(a)(2) of the Act (15 U.S.C. 80b-3a(a)(2)) and reported on its 
annual updating amendment to Form ADV (17 CFR 279.1), of less than $25 
million, or such higher amount as the Commission may by rule deem 
appropriate under Section 203A(a)(1)(A) of the Act (15 U.S.C. 80b-
3a(a)(1)(A));
* * * * *
    (b) For purposes of this section:
    (1) Control means the power, directly or indirectly, to direct the 
management or policies of a person, whether through ownership of 
securities, by contract, or otherwise.
    (i) A person is presumed to control a corporation if the person:
    (A) Directly or indirectly has the right to vote 25 percent or more 
of a class of the corporation's voting securities; or
    (B) Has the power to sell or direct the sale of 25 percent or more 
of a class of the corporation's voting securities.
    (ii) A person is presumed to control a partnership if the person 
has the right to receive upon dissolution, or has contributed, 25 
percent or more of the capital of the partnership.
    (iii) A person is presumed to control a limited liability company 
(LLC) if the person:
    (A) Directly or indirectly has the right to vote 25 percent or more 
of a class of the interests of the LLC;
    (B) Has the right to receive upon dissolution, or has contributed, 
25 percent or more of the capital of the LLC; or
    (C) Is an elected manager of the LLC.
    (iv) A person is presumed to control a trust if the person is a 
trustee or managing agent of the trust.
* * * * *

    7. Section 275.203-1 is revised to read as follows:


Sec. 275.203-1  Application for investment adviser registration.

    (a) Form ADV. To apply for registration with the Commission as an 
investment adviser, you must complete and file Form ADV (17 CFR 279.1) 
by following the instructions in the Form.
    (b) Electronic filing. (1) If you apply for registration after 
January 1, 2001, you must file electronically with the Investment 
Adviser Registration Depository (IARD), unless you have received a 
hardship exemption under Sec. 275.203-3.


    Note to Paragraph (b)(1): Information on how to file with the 
IARD is available on the Commission's website at http://www.sec.gov/iard>.


    (2) You are not required to file with the Commission a copy of Part 
II of Form ADV if you maintain a copy of your Part II (and any brochure 
you deliver to clients) in your files. The copy maintained in your 
files is considered filed with the Commission.


    Note to Paragraph (b)(2): The Commission has proposed, but not 
adopted, substantial changes to Part II of Form ADV. Thus, the rules 
for preparing, delivering, and offering Part II (or a brochure 
containing at least the information contained in Part II) have not 
changed. If you are an SEC-registered adviser, however, you no 
longer have to file Part II with the Commission. Instead, you must 
keep a copy in your files, and update the information in your Part 
II whenever it becomes materially inaccurate. If you are a State-
registered adviser, State law may continue to require you to file 
Part II with the appropriate State securities authority on paper, 
regardless of whether you are filing Part 1 on paper or through the 
IARD.


    (c) When filed. Each Form ADV is considered filed with the 
Commission upon acceptance by the IARD.
    (d) Filing fees. You must pay NASD Regulation, Inc. (NASDR) (the 
operator

[[Page 57449]]

of the IARD) a filing fee. The Commission has approved the amount of 
the filing fee. No portion of the filing fee is refundable. Your 
completed application for registration will not be accepted by NASDR, 
and thus will not be considered filed with the Commission, until you 
have paid the filing fee.

    8. Section 275.203-2 is revised to read as follows:


Sec. 275.203-2  Withdrawal from investment adviser registration.

    (a) Form ADV-W. You must file Form ADV-W (17 CFR 279.2) to withdraw 
from investment adviser registration with the Commission (or to 
withdraw a pending registration application).
    (b) Electronic filing. Once you have filed your Form ADV (17 CFR 
279.1) (or any amendments to Form ADV) electronically with the 
Investment Adviser Registration Depository (IARD), any Form ADV-W you 
file must be filed with the IARD, unless you have received a hardship 
exemption under Sec. 275.203-3.
    (c) Effective date--upon filing. Each Form ADV-W filed under this 
section is effective upon acceptance by the IARD, provided however that 
your investment adviser registration will continue for a period of 
sixty days after acceptance solely for the purpose of commencing a 
proceeding under section 203(e) of the Act (15 U.S.C. 80b-3(e)).
    (d) Filing fees. You do not have to pay a fee to file Form ADV-W 
through the IARD.
    (e) Form ADV-W is a report. Each Form ADV-W required to be filed 
under this section is a ``report'' within the meaning of sections 204 
and 207 of the Act (15 U.S.C. 80b-4 and 80b-7).

    9. Section 275.203-3 is added to read as follows:


Sec. 275.203-3  Hardship exemptions.

    This section provides two ``hardship exemptions'' from the 
requirement to make Advisers Act filings electronically with the 
Investment Adviser Registration Depository (IARD).
    (a) Temporary hardship exemption--(1) Eligibility for exemption. If 
you are registered with the Commission as an investment adviser and 
submit electronic filings on the Investment Adviser Registration 
Depository (IARD) system, but have unanticipated technical difficulties 
that prevent you from submitting a filing to the IARD system, you may 
request a temporary hardship exemption from the requirements of this 
chapter to file electronically.
    (2) Application procedures. To request a temporary hardship 
exemption, you must:
    (i) File Form ADV-H (17 CFR 279.3) in paper format with NASD 
Regulation, Inc. (NASDR) no later than one business day after the 
filing that is the subject of the ADV-H was due; and
    (ii) Submit the filing that is the subject of the Form ADV-H in 
electronic format with the IARD no later than seven business days after 
the filing was due.
    (3) Effective date--upon filing. The temporary hardship exemption 
will be granted when you file a completed Form ADV-H with NASDR.
    (b) Continuing hardship exemption--(1) Eligibility for exemption. 
If you are a ``small business'' (as described in paragraph (b)(5) of 
this section), you may apply for a continuing hardship exemption.
    The period of the exemption may be no longer than one year after 
the date on which you apply for the exemption.
    (2) Application procedures. To apply for a continuing hardship 
exemption, you must file Form ADV-H with NASDR at least ten business 
days before a filing is due. The Commission will grant or deny your 
application within ten business days after you file Form ADV-H.
    (3) Effective date--upon approval. You are not exempt from the 
electronic filing requirements until and unless the Commission approves 
your application. If the Commission approves your application, you may 
submit your filings to NASDR in paper format for the period of time for 
which the exemption is granted.
    (4) Criteria for exemption. Your application will be granted only 
if you are able to demonstrate that the electronic filing requirements 
of this chapter are prohibitively burdensome or expensive.
    (5) Small business. You are a ``small business'' for purposes of 
this section if you are required to answer Item 12 of Form ADV (17 CFR 
279.1) and checked ``no'' to each question in Item 12 that you were 
required to answer.

    Note to Paragraphs (a) and (b): NASDR will charge you an 
additional fee covering its cost to convert to electronic format a 
filing made in reliance on a continuing hardship exemption.



    10. Section 275.203A-1 is revised to read as follows:


Sec. 275.203A-1  Eligibility for SEC registration; switching to or from 
SEC registration.

    (a) Eligibility for SEC registration--(1) Threshold for SEC 
registration--$30 million of assets under management. If the State 
where you maintain your principal office and place of business has 
enacted an investment adviser statute, you are not required to register 
with the Commission, unless:
    (i) You have assets under management of at least $30,000,000, as 
reported on your Form ADV (17 CFR 279.1); or
    (ii) You are an investment adviser to an investment company 
registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1).
    (2) Exemption for investment advisers having between $25 and $30 
million of assets under management. If the State where you maintain 
your principal office and place of business has enacted an investment 
adviser statute, you may register with the Commission if you have 
assets under management of at least $25,000,000 but less than 
$30,000,000, as reported on your Form ADV (17 CFR 279.1). This 
paragraph (a)(2) shall not apply if:
    (i) You are an investment adviser to an investment company 
registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1 to 
80a-64); or
    (ii) You are eligible for an exemption described in Sec. 275.203A-2 
of this chapter.


    Note to Paragraphs (a)(1) and (a)(2): Paragraphs (a)(1) and 
(a)(2) of this section together make SEC registration optional for 
certain investment advisers that have between $25 and $30 million of 
assets under management.


    (b) Switching to or from SEC registration--(1) State-registered 
advisers--switching to SEC registration. If you are registered with a 
State securities authority, you must apply for registration with the 
Commission within 90 days of filing an annual updating amendment to 
your Form ADV reporting that you have at least $30 million of assets 
under management.
    (2) SEC-registered advisers--switching to State registration. If 
you are registered with the Commission and file an annual updating 
amendment to your Form ADV reporting that you no longer have $25 
million of assets under management (or are not otherwise eligible for 
SEC registration), you must file Form ADV-W (17 CFR 279.2) to withdraw 
your SEC registration within 180 days of your fiscal year end (unless 
you then have at least $25 million of assets under management or are 
otherwise eligible for SEC registration). During this period while you 
are registered with both the Commission and one or more State 
securities authorities, the Investment Advisers Act of 1940 and 
applicable State law will apply to your advisory activities.

[[Page 57450]]


    11. Section 275.203A-2 is amended as follows:
    a. The introductory text is republished;
    b. In paragraph (b)(3), the phrase ``Schedule I'' is revised to 
read ``an annual updating amendment'';
    c. The introductory text to paragraph (d) is republished;
    d. Paragraphs (d)(2) and (d)(3) are revised;
    e. The introductory text to paragraph (e) is republished; and
    f. Paragraphs (e)(2), (e)(3) and (e)(4) are revised to read as 
follows:


Sec. 275.203A-2  Exemptions from prohibition on SEC registration.

    The prohibition of section 203A(a) of the Act (15 U.S.C. 80b-3a(a)) 
does not apply to:
* * * * *
    (d) Investment advisers expecting to be eligible for SEC 
registration within 120 days. An investment adviser that:
* * * * *
    (2) Indicates on Schedule D of its Form ADV (17 CFR 279.1) that it 
will withdraw from registration with the Commission if, on the 120th 
day after the date the investment adviser's registration with the 
Commission becomes effective, the investment adviser would be 
prohibited by section 203A(a) of the Act (15 U.S.C. 80b-3a(a)) from 
registering with the Commission; and
    (3) Notwithstanding Sec. 275.203A-1(b)(2) of this chapter, files a 
completed Form ADV-W (17 CFR 279.2) withdrawing from registration with 
the Commission within 120 days after the date the investment adviser's 
registration with the Commission becomes effective.
    (e) Multi-State investment advisers. An investment adviser that:
* * * * *
    (2) Indicates on Schedule D of its Form ADV that the investment 
adviser has reviewed the applicable State and federal laws and has 
concluded that, in the case of an application for registration with the 
Commission, it is required by the laws of 30 or more States to register 
as an investment adviser with the State securities authorities in the 
respective States or, in the case of an amendment to Form ADV, it would 
be required by the laws of at least 25 States to register as an 
investment adviser with the State securities authorities in the 
respective States, within 90 days prior to the date of filing Form ADV;
    (3) Undertakes on Schedule D of its Form ADV to withdraw from 
registration with the Commission if the adviser indicates on an annual 
updating amendment to Form ADV that the investment adviser would be 
required by the laws of fewer than 25 States to register as an 
investment adviser with the securities commissioners (or any agencies 
or officers performing like functions) in the respective States, and 
that the investment adviser would be prohibited by section 203A(a) of 
the Act (15 U.S.C. 80b-3a(a)) from registering with the Commission, by 
filing a completed Form ADV-W within 180 days of the adviser's fiscal 
year end (unless the adviser then has at least $25 million of assets 
under management or is otherwise eligible for SEC registration); and
    (4) Maintains in an easily accessible place a record of the States 
in which the investment adviser has determined it would, but for the 
exemption, be required to register for a period of not less than five 
years from the filing of a Form ADV that includes a representation that 
is based on such record.

    12. Section 275.204-1 is revised to read as follows:


Sec. 275.204-1  Amendments to application for registration.

    (a) When amendment is required. You must amend your Form ADV (17 
CFR 279.1):
    (1) At least annually, within 90 days of the end of your fiscal 
year; and
    (2) More frequently, if required by the instructions to Form ADV.
    (b) Transition to electronic filing. (1) If you are an investment 
adviser registered with the Commission on December 31, 2000, you must 
amend your Form ADV by electronically filing a completed Part 1A of 
Form ADV (as amended effective October 10, 2000) with the Investment 
Adviser Registration Depository (IARD) according to the following 
schedule:
    (i) If your fiscal year ends in December, and
    (A) Your SEC registration number is 801-1 through 801-36806, you 
must file no later than January 31, 2001;
    (B) Your SEC registration number is 801-36807 through 801-54145, 
you must file no later than February 28, 2001;
    (C) Your SEC registration number is 801-54146 or higher, you must 
file no later than March 30, 2001.
    (ii) If your fiscal year ends in any month other than December 
(i.e., January through November), you must file no later than April 30, 
2001.


    Note to Paragraphs (a) and (b): Information on how to file with 
the IARD is available on our website at http://www.sec.gov/iard>.


    (2) If you are an investment adviser whose registration application 
(filed on paper) was pending on January 1, 2001 and became effective 
after that date, you must amend your Form ADV by electronically filing 
a completed Part 1A of Form ADV (as amended effective October 10, 2000) 
with the IARD by April 30, 2001.
    (3) If you have received a continuing hardship exemption under 
Sec. 275.203-3, you must file a completed Part 1A of Form ADV on paper 
with NASD Regulation, Inc. (NASDR) when you are required to amend your 
Form ADV by the schedule in paragraph (b)(1) of this section.
    (4) If you have filed Part 1A of Form ADV with the IARD under 
paragraphs (1) or (2) of this section, you must file all subsequent 
amendments to Part 1A of your Form ADV with the IARD.
    (c) Special rule for Part II. You are not required to file with the 
Commission a copy of Part II of Form ADV if you maintain a copy of your 
Part II (and any brochure you deliver to clients) in your files. The 
copy maintained in your files is considered filed with the Commission.

    Note to Paragraph (c): The Commission has proposed, but not 
adopted, substantial changes to Part II of Form ADV. Thus, the rules 
for preparing, delivering, and offering Part II (or a brochure 
containing at least the information contained in Part II) have not 
changed. If you are an SEC-registered adviser, however, you no 
longer have to file Part II with the Commission. Instead, you must 
keep a copy in your files, and update the information in your Part 
II whenever it becomes materially inaccurate. If you are a State-
registered adviser, State law may continue to require you to file 
Part II with the appropriate State securities authority on paper, 
regardless of whether you are filing Part 1 on paper or through the 
IARD.

    (d) Filing fees. You must pay NASDR (the operator of the IARD) an 
initial filing fee when you first electronically file Part 1A of Form 
ADV pursuant to sub-paragraph (b) of this section. After you pay the 
initial filing fee, you must pay an annual filing fee each time you 
file your annual updating amendment. No portion of either fee is 
refundable. The Commission has approved the filing fees. Your amended 
Form ADV will not be accepted by NASDR, and thus will not be considered 
filed with the Commission, until you have paid the filing fee.
    (e) Amendments to Form ADV are reports. Each amendment required to 
be filed under this section is a ``report'' within the meaning of 
sections 204 and 207 of the Act (15 U.S.C. 80b-4 and 80b-7).
    13. Section 275.204-5 is removed and reserved.

[[Page 57451]]

PART 279--FORMS PRESCRIBED UNDER THE INVESTMENT ADVISERS ACT OF 
1940

    14. The authority citation for Part 279 continues to read as 
follows:

    Authority: 15 U.S.C. 80b-1 to 80b-22.

    15. Form ADV (referenced in Sec. 279.1) is revised.


    Note: The text of Form ADV does not and the amendments will not 
appear in the Code of Federal Regulations. Form ADV is attached as 
Appendix A.



    16. Form ADV-W (referenced in Sec. 279.2) is revised.


    Note: The text of Form ADV-W does not and the amendments will 
not appear in the Code of Federal Regulations. Form ADV-W is 
attached as Appendix B.



    17. Section 279.3 and Form ADV-H are added as follows:

    Note: The text of Form ADV-H will not appear in the Code of 
Federal Regulations. Form ADV-H is attached as Appendix C.

Sec. 279.3  Form ADV-H, application for a temporary or continuing 
hardship exemption.

    An investment adviser must file this form under Sec. 275.203-3 of 
this chapter to request a temporary hardship exemption or apply for a 
continuing hardship exemption.
    18. Form 4-R (referenced in Sec. 279.4) is removed.
    19. Section 279.4 is revised and Form ADV-NR is added as follows:


    Note: Form ADV-NR will not appear in the Code of Federal 
Regulations. Form ADV-NR is attached as Appendix D.

Sec. 279.4  Form ADV-NR, appointment of agent for service of process by 
non-resident general partner and non-resident managing agent of an 
investment adviser.

    Each non-resident general partner or managing agent of an 
investment adviser must file this form under Sec. 275.0-2 of this 
chapter.


Sec. 279.5  [Removed and Reserved]

    20. Section 279.5 and Form 5-R are removed and reserved.


    Note: Form 5-R does not appear in the Code of Federal 
Regulations.


Sec. 279.6  [Removed and Reserved]

    21. Section 279.6 and Form 6-R are removed and reserved.


    Note: Form 6-R does not appear in the Code of Federal 
Regulations.


Sec. 279.7  [Removed and Reserved]

    22. Section 279.7 and Form 7-R are removed and reserved.

    Note: Form 7-R does not appear in the Code of Federal 
Regulations.


Sec. 279.9  [Removed and Reserved]

    23. Section 279.9 and Form ADV-Y2K are removed and reserved.

    Note: Form ADV-Y2K does not appear in the Code of Federal 
Regulations.



    By the Commission.
    Dated: September 12, 2000.
Margaret H. McFarland,
Deputy Secretary.
[Note: Appendixes A, B, C, and D will not appear in the Code of 
Federal Regulations]

Appendix A

Form ADV (Paper Version); UNIFORM APPLICATION FOR INVESTMENT ADVISER 
REGISTRATION

Form ADV: General Instructions

    Read these instructions carefully before filing Form ADV. 
Failure to follow these instructions, properly complete the form, 
and pay all required fees may result in your filing being returned 
to you. Electronic filers should follow the instructions available 
on-line, which are different.
    In these instructions and in the form, ``you'' means the 
investment adviser (i.e., the advisory firm) applying for 
registration or amending its registration. If you are a ``separately 
identifiable department or division'' (SID) of a bank, ``you'' means 
the SID, rather than your bank, unless the instructions or the form 
provide otherwise. Terms that appear in italics are defined in the 
Glossary of Terms to Form ADV.

1. Where can I get more information on Form ADV, electronic filing, and 
the IARD?

    The SEC provides information about its rules and the Advisers 
Act on its website: http://www.sec.gov/iard>.
    NASAA provides information about state investment adviser laws 
and state rules, and how to contact a state securities authority, on 
its website: http://www.nasaa.org>.
    NASDR provides information about the IARD and electronic filing 
on the IARD website: http://www.iard.com>.

2. What is Form ADV used for?

    Investment advisers use Form ADV to:
     Register with the Securities and Exchange Commission
     Register with one or more state securities authorities
     Amend those registrations

3. How is Form ADV organized?

     Part 1A asks a number of questions about you, your 
business practices, the persons who own and control you, and the 
persons who provide investment advice on your behalf. All advisers 
registering with the SEC or any of the state securities authorities 
must complete Part 1A.
    Part 1A also contains several schedules that supplement Part 1A. 
The items of Part 1A let you know which schedules you must complete.
     Schedule A asks for information about your direct 
owners and executive officers.
     Schedule B asks for information about your indirect 
owners.
     Schedule C is used by paper filers to update the 
information required by Schedules A and B (see Instruction 14).
     Schedule D asks for additional information for certain 
items in Part 1A.
     Disclosure Reporting Pages (or ``DRPs'' ) ask for 
details about disciplinary events involving you or persons 
affiliated with you. (These are considered schedules too.)
     Part 1B asks additional questions required by state 
securities authorities. Part 1B contains three DRPs. If you are 
applying for registration or are registered only with the SEC, you 
do not have to complete Part 1B. (If you are filing electronically 
and you do not have to complete Part 1B, you will not see Part 1B.)
     Part II is your current brochure. You must continue to 
amend your brochure, deliver it to prospective clients, and annually 
offer it to current clients. See rule 204-3. You are not required to 
file amendments to Part II with the SEC.

    Note: The SEC has proposed to amend Part II of Form ADV. These 
changes, proposed as Part 2, have not been adopted at this time. 
Until the Commission adopts Part 2, the current brochure 
requirements are in effect, except that you are no longer required 
to file amendments to Part II with the Commission. See rule 204-3.

4. When am I required to update my Form ADV?

    You must amend your Form ADV each year by filing an annual 
updating amendment within 90 days after the end of your fiscal year. 
When you submit your annual updating amendment, you must update your 
responses to all items.
    In addition to your annual updating amendment, you must amend 
your Form ADV by filing additional amendments (other-than-annual 
amendments) promptly if:
     information you provided in response to Items 1, 3, 9, 
or 11 of Part 1A or Items 1, 2.A. through 2.F., or 2.I. of Part 1B 
become inaccurate in any way;
     information you provided in response to Items 4, 8, or 
10 of Part 1A or Item 2.G. of Part 1B become materially inaccurate; 
or
     information you provided in your brochure becomes 
materially inaccurate.
    If you are submitting an other-than-annual amendment, you are 
not required to update your responses to Items 2, 5, 6, 7, or 12 of 
Part 1A or Items 2.H. or 2.J. of Part 1B even if your responses to 
those items have become inaccurate. If you are amending Part II, do 
not file the amendment with the SEC.
    Failure to update your Form ADV, as required by this 
instruction, is a violation of SEC rule 204-1 and similar state 
rules and could lead to your registration being revoked.

5. Are there changes to the Part II requirements?

    The rules for preparing, delivering and offering Part II have 
not changed. You can still satisfy these requirements by delivering 
Part II or a brochure containing at least the information contained 
in Part II. If you are using Part II, you can continue to use

[[Page 57452]]

Schedule F as a continuation sheet. If you check ``yes'' to Item 14 
of Part II, prepare and file a balance sheet following instructions 
in Schedule G. The balance sheet information must be distributed to 
clients as part of your written disclosure statement (regardless of 
whether you use Part II or a brochure).
    If you are an SEC-registered adviser, however, you no longer 
have to file Part II with the SEC. Instead, you must keep a copy in 
your files, and provide it to SEC staff upon request. You must 
update the information in your Part II whenever it becomes 
materially inaccurate. You can do this by substituting pages, or by 
affixing a ``sticker'' replacing the stale information.
    If you are a state-registered adviser, you must continue to file 
Part II with the appropriate state securities authority on paper, 
regardless of whether you are filing Part 1 on paper or 
electronically through the IARD.

    Note: The SEC has proposed, but not adopted, substantial changes 
to Part II.

6. Where do I sign my Form ADV application or amendment?

    You must sign the appropriate Execution Page. There are three 
Execution Pages at the end of the form. Your initial application and 
all amendments to Form ADV must include at least one Execution Page.
     If you are applying for or amending your SEC 
registration, you must sign and submit either a:
     Domestic Investment Adviser Execution Page, if you (the 
advisory firm) are a resident of the United States; or
     Non-Resident Investment Adviser Execution Page, if you 
(the advisory firm) are not a resident of the United States.
     If you are applying for or amending your registration 
with a state securities authority, you must sign and submit the 
State-Registered Investment Adviser Execution Page.

7. Who must sign my Form ADV or amendment?

    The individual who signs the form depends upon your form of 
organization:
     For a sole proprietorship, the sole proprietor.
     For a partnership, a general partner.
     For a corporation, an authorized principal officer.
     For a ``separately identifiable department or 
division'' (SID) of a bank, a principal officer of your bank who is 
directly engaged in the management, direction or supervision of your 
investment advisory activities.
     For all others, an authorized individual who 
participates in managing or directing your affairs.
    The signature does not have to be notarized, and in the case of 
an electronic filing, should be a typed name.

8. How do I file my Form ADV?

    Note: Until May 1, 2001, you must also consult the Form ADV 
Supplemental Instructions for Transition to Electronic Filing.

    Complete Form ADV electronically using the Investment Adviser 
Registration Depository (IARD) if:
     You are filing with the SEC (and submitting notice 
filings to any of the state securities authorities), or
     You are filing with a state securities authority that 
requires or permits advisers to submit Form ADV through the IARD.
    To file electronically, go the IARD website (www.iard.com>), 
which contain detailed instructions for advisers to follow when 
filing through the IARD.
    Complete Form ADV (Paper Version) on paper if:
     You are filing with the SEC or a state securities 
authority that requires electronic filing, but you have been granted 
a continuing hardship exemption. Hardship exemptions are described 
in Instruction 13.
     You are filing with a state securities authority that 
permits (but does not require) electronic filing and you do not file 
electronically.

9. How do I get started filing electronically?

     First, get a copy of the IARD Entitlement Package from 
the following web site: http://www.iard.com>. Second, request access 
to the IARD system for your firm by completing and submitting the 
IARD Entitlement Package. The IARD Entitlement Package must be 
submitted on paper. Mail the forms to: IARD Entitlement Requests, 
NASD Regulation, Inc., P.O. Box 9495, Gaithersburg, MD 20898-9495.
     When NASDR receives your Entitlement Package, they will 
assign a CRD number (identification number for your firm) and a user 
I.D. code and password (identification number and system password 
for the individual(s) who will submit Form ADV filings for your 
firm). Your firm may request an I.D. code and password for more than 
one individual. The NASDR also will create a financial account for 
you from which the IARD will deduct filing fees and any state fees 
you are required to pay. If you already have a CRD account with 
NASDR, it will also serve as your IARD account; a separate account 
will not be established.
     Once you receive your CRD number, user I.D. code and 
password, and you have funded your account, you are ready to file 
electronically.
     Questions regarding the Entitlement Process should be 
addressed to NASDR at 240.386.4848.

10. If I am applying for registration with the SEC, or amending my SEC 
registration, how do I make notice filings with the state securities 
authorities?

    If you are applying for registration with the SEC or amending 
your SEC registration, one or more state securities authorities may 
require you to provide them with copies of your SEC filings. We call 
these filings ``notice filings.'' Your notice filings will be sent 
electronically to the states that you check on Item 2.B. of Part 1A. 
The state securities authorities to which you send notice filings 
may charge fees, which will be deducted from the account you 
establish with NASDR. To determine which state securities 
authorities require SEC-registered advisers to submit notice filings 
and to pay fees, consult the relevant state investment adviser law 
or state securities authority. See General Instruction 1.
    If you are granted a continuing hardship exemption to file Form 
ADV on paper, NASDR will enter your filing into the IARD and your 
notice filings will be sent electronically to the state securities 
authorities that you check on Item 2.B. of Part 1A.

11. I am registered with a state. When must I switch to SEC 
registration?

    If you report on your annual updating amendment that your assets 
under management have increased to $30 million or more, you must 
register with the SEC within 90 days after you file that annual 
updating amendment. If your assets under management increase to $25 
million or more but not $30 million, you may, but are not required 
to, register with the SEC (assuming you are not otherwise required 
to register with the SEC). Once you register with the SEC, you are 
subject to SEC regulation, regardless of whether you remain 
registered with one or more states. Each of your investment adviser 
representatives, however, may be subject to registration in those 
states in which the representative has a place of business. See SEC 
rule 203A-1(b). For additional information, consult the investment 
adviser laws or the state securities authority for the particular 
state in which you are ``doing business.'' See General Instruction 
1.

12. I am registered with the SEC. When must I switch to registration 
with a state securities authority?

    If you report on your annual updating amendment that you have 
assets under management of less than $25 million and you are not 
otherwise eligible to register with the SEC, you must withdraw from 
SEC registration within 180 days after the end of your fiscal year 
by filing Form ADV-W. You should consult state law in the states 
that you are doing business to determine if you are required to 
register in these states. See General Instruction 1. Until you file 
your Form ADV-W with the SEC, you will remain subject to SEC 
regulation, and you also will be subject to regulation in any states 
where you register. See SEC rule 203A-1(b).

13. Are there filing fees?

    Yes. These fees go to support and maintain the IARD. The IARD 
filing fees are in addition to any registration or other fee that 
may be required by state law. You must pay an IARD filing fee for 
your initial application and each annual updating amendment. There 
is no filing fee for an other-than-annual amendment or Form ADV-W. 
The IARD filing fee schedule is published at http://www.sec.gov/iard>; http://www.nasaa.org>; and http://www.iard.com>.
    If you are submitting a paper filing under a continuing hardship 
exemption (see Instruction 14), you are required to pay an 
additional fee. The amount of the additional fee depends on whether 
you are filing Form ADV or Form ADV-W. (There is no additional fee 
for filings made on Form ADV-W.) The hardship filing fee schedule is 
available at 240.386.4848.

[[Page 57453]]

    14. What if I am not able to file electronically?
    If you are required to file electronically but cannot do so, you 
may be eligible for one of two types of hardship exemptions from the 
electronic filing requirements.
     A temporary hardship exemption is available if you file 
electronically, but you encounter unexpected difficulties that 
prevent you from making a timely filing with the IARD, such as a 
computer malfunction or electrical outage. This exemption does not 
permit you to file on paper; instead, it extends the deadline for an 
electronic filing for seven business days. See SEC rule 203-3(a).
     A continuing hardship exemption may be granted if you 
are a small business and you can demonstrate that filing 
electronically would impose an undue hardship. You are a small 
business, and may be eligible for a continuing hardship exemption, 
if you are required to answer Item 12 of Part 1A (because you have 
assets under management of less than $25 million) and you are able 
to respond ``no'' to each question in Item 12. See SEC rule 0-7.
    If you have been granted a continuing hardship exemption, you 
must complete and file the paper version of Form ADV with NASDR. 
NASDR will enter your responses into the IARD. As discussed in 
General Instruction 13, NASDR will charge you a fee to reimburse it 
for the expense of data entry.
    Before applying for a continuing hardship exemption, consider 
engaging a firm that assists investment advisers in making filings 
with the IARD. Check the SEC's web site (http://www.sec.gov/iard>) 
to obtain a list of firms that provide these services.

15. I am eligible to file on paper. How do I make a paper filing?

    When filing on paper, you must:
     Type all of your responses.
     Include your name (the same name you provide in 
response to Item 1.A. of Part 1A) and the date on every page.
     If you are amending your Form ADV:
     complete page 1 and circle the number of any item for 
which you are changing your response.
     include your SEC 801-number (if you have one) and your 
CRD number (if you have one) on every page.
     complete the amended item in full and circle the number 
of the item for which you are changing your response.
     to amend Schedule A or Schedule B, complete and submit 
Schedule C.
    Where you submit your paper filing depends on why you are 
eligible to file on paper:
     If you are filing on paper because you have been 
granted a continuing hardship exemption, submit one manually signed 
Form ADV and one copy to: IARD Document Processing, NASD Regulation, 
Inc., P.O. Box 9495, Gaithersburg, MD 20898-9495.
    If you complete Form ADV on paper and submit it to NASDR but you 
do not have a continuing hardship exemption, the submission will be 
returned to you.
     If you are filing on paper because a state in which you 
are registered or applying for registration allows you to submit 
paper instead of electronic filings, submit one manually signed Form 
ADV and one copy to the appropriate state securities authorities.

16. Who is required to file Form ADV-NR?

    Every non-resident general partner and managing agent of all 
SEC-registered advisers, whether or not the adviser is resident in 
the United States, must file Form ADV-NR in connection with the 
adviser's initial application. A general partner or managing agent 
of an SEC-registered adviser who becomes a non-resident after the 
adviser's initial application has been submitted must file Form ADV-
NR within 30 days. Form ADV-NR must be filed on paper (it cannot be 
filed electronically).
    Submit Form ADV-NR to the SEC at the following address: 
Securities and Exchange Commission, 450 5th Street, N.W., Mail Stop 
A-2, Washington, DC 20549; Attn: Branch of Registrations & 
Examinations
    Failure to file Form ADV-NR promptly may delay SEC consideration 
of your initial application.

Federal Information Law and Requirements

    Advisers Act Sections 203(c), 204, 206 and 211(a) authorize the 
SEC to collect the information required by Form ADV. The SEC uses 
the information for regulatory purposes, including deciding whether 
to grant registration. The SEC keeps files of the information 
submitted on this form and makes the information publicly available. 
The SEC may reject forms that do not include required information. 
By accepting a form, however, the SEC does not make a finding that 
it has been completed or submitted correctly. Intentional 
misstatements or omissions constitute federal criminal violations 
under 18 U.S.C. Sec. 1001 and 15 U.S.C. Sec. 80b-17.

SEC's Collection of Information

    An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it 
displays a currently valid control number. The Advisers Act 
authorizes the SEC to collect the information on Form ADV from 
applicants. See 15 U.S.C. Secs. 80b-3(c)(1) and 80b-4. Filing the 
form is mandatory.
    The main purpose of this form is to enable the SEC to register 
investment advisers. Every applicant for registration with the SEC 
as an adviser must file the form. See 17 C.F.R. Sec. 275.203-1. The 
form is filed annually by every adviser, no later than 90 days after 
the end of its fiscal year, to amend its registration. It also is 
filed promptly during the year to reflect material changes. See 17 
C.F.R. Sec. 275.204-1. The SEC maintains the information on the form 
and makes it publicly available through the IARD.
    Anyone may send the SEC comments on the accuracy of the burden 
estimate on page 1 of the form, as well as suggestions for reducing 
the burden. The Office of Management and Budget has reviewed this 
collection of information under 44 U.S.C. Sec. 3507.
    The information contained in the form is part of a system of 
records subject to the Privacy Act of 1974, as amended. The SEC has 
published in the Federal Register the Privacy Act System of Records 
Notice for these records.

Form ADV (Paper Version), Uniform Application for Investment Adviser 
Registration

Form ADV: Supplemental Instructions for Transition to Electronic Filing

SEC Requirements

    SEC rules require advisers that are registered or applying for 
registration with the SEC to file electronically. All applications 
for registration filed after December 31, 2000 must be filed 
electronically through the IARD system. See SEC rule 203-1.
    If your SEC registration was made effective on or before 
December 31, 2000, you must transition to electronic filing by 
submitting an amendment to your Form ADV through the IARD during one 
of the first four months of 2001. To facilitate an orderly 
transition, registered advisers have been divided into four groups. 
Members of each group will file amendments to their registration 
forms during one of the four months. See SEC rule 204-1.
    If your fiscal year ends in December and

------------------------------------------------------------------------
         your SEC 801  number is:                 you must file by:
------------------------------------------------------------------------
 801-1 through 801-36806..........  January 31, 2001
 801-36807 through 801-54145......  February 28, 2001
 801-54146 and higher.............  March 30, 2001
------------------------------------------------------------------------

    If your fiscal year ends in any month other than December

------------------------------------------------------------------------
                                                  you must file by:
------------------------------------------------------------------------
                                            April 30, 2001
------------------------------------------------------------------------

State Requirements

    Check with the state securities authorities of the states in 
which you have a filing obligation to determine whether you can or 
must file Form ADV electronically through the IARD. NASAA provides 
information about state investment adviser laws and state rules, and 
how to contact a state securities authority, on its website: http://www.nasaa.org.

Form ADV (Paper Version); Uniform Application for Investment Adviser 
Registration

Form ADV: Instructions for Part 1A

    These instructions explain how to complete certain items in Part 
1A of Form ADV.

1. Item 1: Identifying Information

    If you are a ``separately identifiable department or division'' 
(SID) of a bank, answer Item 1.A. with the full legal name of your 
bank, and answer Item 1.B. with your own name (the name of the 
department or division) and all names under which you conduct your 
advisory business. In addition, your principal office and place of 
business in

[[Page 57454]]

Item 1.F. should be the principal office at which you conduct your 
advisory business. In response to Item 1.I., the World Wide Web site 
addresses you list on Schedule D should be sites that provide 
information about your own activities, rather than general 
information about your bank.

2. Item 2: SEC Registration

    If you are registered or applying for registration with the SEC, 
you must indicate in Item 2.A. why you are eligible to register with 
the SEC by checking one or more boxes.
    a. Item 2.A(1): Adviser with Assets Under Management of $25 
Million or More. You may check box 1 only if your response to Item 
5.F(2)(c) is $25 million or more. While you may register with the 
SEC if your assets under management are at least $25 million but 
less than $30 million, you must register with the SEC if your assets 
under management are $30 million or more. Part 1A Instruction 5.b. 
explains how to calculate your assets under management.
    If you are a state-registered adviser and you report on your 
annual updating amendment that your assets under management 
increased to $25 million or more, you may register with the SEC. If 
your assets under management increased to $30 million or more, you 
must register with the SEC within 90 days after you file that annual 
updating amendment. See SEC rule 203A-1(b) and Form ADV General 
Instruction 10.
    b. Item 2.A(4): Adviser to an Investment Company. You may check 
box 4 only if you currently provide advisory services under an 
investment advisory contract to an investment company registered 
under the Investment Company Act of 1940 and the investment company 
is operational (i.e., has assets and shareholders, other than just 
the organizing shareholders). See section 203A(a)(1)(B) of the 
Advisers Act. Advising investors about the merits of investing in 
mutual funds or recommending particular mutual funds does not make 
you eligible to check this box.
    c. Item 2.A(5): Nationally Recognized Statistical Rating 
Organization. You may check box 5 only if you are designated as a 
nationally recognized statistical rating organization pursuant to an 
application filed under paragraph (c)(13)(i) of SEC rule 15c3-1 
under the Securities Exchange Act of 1934. See SEC rule 203A-2(a). 
This designation generally is limited to rating agencies, such as 
Moody's and Standard & Poor's.
    d. Item 2.A(6): Pension Consultant. You may check box 6 only if 
you are eligible for the pension consultant exemption from the 
prohibition on SEC registration.
     You are eligible for this exemption if you provided 
investment advice to employee benefit plans, governmental plans, or 
church plans with respect to assets having an aggregate value of $50 
million or more during the 12-month period that ended within 90 days 
of filing this Form ADV. You are not eligible for this exemption if 
you only advise plan participants on allocating their investments 
within their pension plans. See SEC rule 203A-2(b).
     To calculate the value of assets for purposes of this 
exemption, aggregate the assets of the plans for which you provided 
advisory services at the end of the 12-month period. If you provided 
advisory services to other plans during the 12-month period, but 
your employment or contract terminated before the end of the 12-
month period, you also may include the value of those assets.
    e. Item 2.A(7): Affiliated Adviser. You may check box 7 only if 
you are eligible for the affiliated adviser exemption from the 
prohibition on SEC registration. See SEC rule 203A-2(c). You are 
eligible for this exemption if you control, are controlled by, or 
are under common control with an investment adviser that is 
registered with the SEC, and you have the same principal office and 
place of business as that other investment adviser. If you check box 
7, you also must complete Section 2.A(7) of Schedule D.
    f. Item 2.A(8): Newly-Formed Adviser. You may check box 8 only 
if you are eligible for the newly-formed-adviser exemption from the 
prohibition on SEC registration. See SEC rule 203A-2(d). You are 
eligible for this exemption if:
     immediately before you file your application for 
registration with the SEC, you were not registered or required to be 
registered with the SEC or a state securities authority; and
     at the time of your formation, you have a reasonable 
expectation that within 120 days of registration you will be 
eligible for SEC registration.
    If you check box 8, you also must complete Section 2.A(8) of 
Schedule D.
    You must file an amendment to Part 1A of your Form ADV that 
updates your response to Item 2.A. within 120 days after the SEC 
declares your registration effective. You may not check box 8 on 
your amendment; since this exemption is available only if you are 
not registered, you may not ``re-rely'' on this exemption. If you 
indicate on that amendment (by checking box 11) that you are not 
eligible to register with the SEC, you also must at that same time 
file a Form ADV-W to withdraw your SEC registration.
    g. Item 2.A(9): Multi-State Adviser. You may check box 9 only if 
you are eligible for the multi-state adviser exemption from the 
prohibition on SEC registration. See SEC rule 203A-2(e). You are 
eligible for this exemption if you are required to register as an 
investment adviser with the securities authorities of 30 or more 
states. If you check box 9, you must complete Section 2.A(9) of 
Schedule D. You must complete Section 2.A(9) of Schedule D in each 
annual updating amendment you submit.
    If you check box 9, you also must:
     create and maintain a list of the states in which, but 
for this exemption, you would be required to register;
     update this list each time you submit an annual 
updating amendment in which you continue to represent that you are 
eligible for this exemption; and
     maintain the list in an easily accessible place for a 
period of not less than five years from each date on which you 
indicate that you are eligible for the exemption.
    If, at the time you file your annual updating amendment, you are 
required to register in less than 25 states and you are not 
otherwise eligible to register with the SEC, you must check box 11 
in Item 2.A. You also must file a Form ADV-W to withdraw your SEC 
registration. See Part 1A Instruction 2.
    h. Item 2.A(11): Adviser No Longer Eligible to Remain Registered 
with the SEC. You must check box 11 if:
     you are registered with the SEC;
     you are filing an annual updating amendment to Form ADV 
in which you indicate in response to Item 5.F(2)(c) that you have 
assets under management of less than $25 million; and
     you are not eligible to check any other box (other than 
box 11) in Item 2.A. (and are therefore no longer eligible to remain 
registered with the SEC).
    You must withdraw from SEC registration within 180 days after 
the end of your fiscal year by filing Form ADV-W. Until you file 
your Form ADV-W, you will remain subject to SEC regulation, and you 
also will be subject to regulation in the states in which you 
register. See SEC rule 203A-1(b).

3. Item 3: Form of Organization

    If you are a ``separately identifiable department or division'' 
(SID) of a bank, answer Item 3.A. by checking ``other.'' In the 
space provided, specify that you are a ``SID of'' and indicate the 
form of organization of your bank. Answer Items 3.B. and 3.C. with 
information about your bank.

4. Item 4: Successions

    a. Succession of an SEC-Registered Adviser. If you (1) have 
taken over the business of an investment adviser or (2) have changed 
your structure or legal status (e.g. form of organization or state 
of incorporation), a new organization has been created, which has 
registration obligations under the Advisers Act. There are different 
ways to fulfill these obligations. You may rely on the registration 
provisions discussed in the General Instructions, or you may be able 
to rely on special registration provisions for ``successors'' to 
SEC-registered advisers, which may ease the transition to the 
successor adviser's registration.
    To determine if you may rely on these provisions, review 
``Registration of Successors to Broker-Dealers and Investment 
Advisers,'' Investment Advisers Act Release No. 1357 (Dec. 28, 
1992). If you have taken over an adviser, follow Part 1A Instruction 
4.a(1), Succession by Application. If you have changed your 
structure or legal status, follow Part 1A Instruction 4.a(2), 
Succession by Amendment. If either (1) you are a ``separately 
identifiable department or division'' (SID) of a bank that is 
currently registered as an investment adviser, and you are taking 
over your bank's advisory business; or (2) you are a SID currently 
registered as an investment adviser, and your bank is taking over 
your advisory business, then follow Part 1A Instruction 4.a(1), 
Succession by Application.
    (1) Succession by Application. If you are not registered with 
the SEC as an adviser, and you are acquiring or assuming 
substantially all of the assets and liabilities of the advisory 
business of an SEC-registered adviser, file a new application for 
registration on Form ADV. You will receive new registration numbers. 
You must file the new

[[Page 57455]]

application within 30 days after the succession. On the application, 
make sure you check ``yes'' to Item 4.A., enter the date of the 
succession in Item 4.B., and complete Section 4 of Schedule D.
    Until the SEC declares your new registration effective, you may 
rely on the registration of the adviser you are acquiring, but only 
if the adviser you are acquiring is no longer conducting advisory 
activities. Once your new registration is effective, a Form ADV-W 
must be filed with the SEC to withdraw the registration of the 
acquired adviser.
    (2) Succession by Amendment. If you are a new investment adviser 
formed solely as a result of a change in form of organization, a 
reorganization, or a change in the composition of a partnership, and 
there has been no practical change in control or management, you may 
amend the registration of the registered investment adviser to 
reflect these changes rather than file a new application. You will 
keep the same registration numbers, and you should not file a Form 
ADV-W. On the amendment, make sure you check ``yes'' to Item 4.A., 
enter the date of the succession in Item 4.B., and complete Section 
4 of Schedule D. You must submit the amendment within 30 days after 
the change or reorganization.
    b. Succession of a State-Registered Adviser. If you (1) have 
taken over the business of an investment adviser or (2) have changed 
your structure or legal status (e.g., form of organization or state 
of incorporation), a new organization has been created, which has 
registration obligations under state investment adviser laws. There 
may be different ways to fulfill these obligations. You should 
contact each state in which you are registered to determine that 
state's requirements for successor registration. See Form ADV 
General Instruction 1.

5. Item 5: Information About Your Advisory Business

    a. Newly-Formed Advisers: Several questions in Item 5 that ask 
about your advisory business assume that you have been operating 
your advisory business for some time. Your response to these 
questions should reflect your current advisory business (i.e., at 
the time you file your Form ADV), with the following exceptions:
     base your response to Item 5.E. on the types of 
compensation you expect to accept;
     base your response to Item 5.G. on the types of 
advisory services you expect to provide during the next year; and
     skip Item 5.H.
    b. Item 5.F: Calculating Your Assets Under Management. In 
determining the amount of your assets under management, include the 
securities portfolios for which you provide continuous and regular 
supervisory or management services as of the date of filing this 
Form ADV.
    (1) Securities Portfolios. An account is a securities portfolio 
if at least 50% of the total value of the account consists of 
securities. For purposes of this 50% test, you may treat cash and 
cash equivalents (i.e., bank deposits, certificates of deposit, 
bankers acceptances, and similar bank instruments) as securities. 
You may include securities portfolios that are:
    (a) your family or proprietary accounts (unless you are a sole 
proprietor, in which case your personal assets must be excluded);
    (b) accounts for which you receive no compensation for your 
services; and
    (c) accounts of clients who are not U.S. residents.
    (2) Value of Portfolio. Include the entire value of each 
securities portfolio for which you provide continuous and regular 
supervisory or management services. If you provide continuous and 
regular supervisory or management services for only a portion of a 
securities portfolio, include as assets under management only that 
portion of the securities portfolio for which you provide such 
services. Exclude, for example, the portion of an account:
    (a) under management by another person; or
    (b) that consists of real estate or businesses whose operations 
you ``manage'' on behalf of a client but not as an investment.
    Do not deduct securities purchased on margin.
    (3) Continuous and Regular Supervisory or Management Services.
    General Criteria. You provide continuous and regular supervisory 
or management services with respect to an account if:
    (a) you have discretionary authority over and provide ongoing 
supervisory or management services with respect to the account; or
    (b) you do not have discretionary authority over the account, 
but you have ongoing responsibility to select or make 
recommendations, based upon the needs of the client, as to specific 
securities or other investments the account may purchase or sell 
and, if such recommendations are accepted by the client, you are 
responsible for arranging or effecting the purchase or sale.
    Factors. You should consider the following factors in evaluating 
whether you provide continuous and regular supervisory or management 
services to an account.
    (a) Terms of the advisory contract. If you agree in an advisory 
contract to provide ongoing management services, this suggests that 
you provide these services for the account. Other provisions in the 
contract, or your actual management practices, however, may suggest 
otherwise.
    (b) Form of compensation. If you are compensated based on the 
average value of the client's assets you manage over a specified 
period of time, that suggests that you provide continuous and 
regular supervisory or management services for the account. If you 
receive compensation in a manner similar to either of the following, 
that suggests you do not provide continuous and regular supervisory 
or management services for the account--
    (i) you are compensated based upon the time spent with a client 
during a client visit; or
    (ii) you are paid a retainer based on a percentage of assets 
covered by a financial plan.
    (c) Management practices. The extent to which you actively 
manage assets or provide advice bears on whether the services you 
provide are continuous and regular supervisory or management 
services. The fact that you make infrequent trades (e.g., based on a 
``buy and hold'' strategy) does not mean your services are not 
``continuous and regular.''
    Examples. You may provide continuous and regular supervisory or 
management services for an account if you:
    (a) have discretionary authority to allocate client assets among 
various mutual funds;
    (b) do not have discretionary authority, but provide the same 
allocation services, and satisfy the criteria set forth in 
Instruction 5.b(3);
    (c) allocate assets among other managers (a ``manager of 
managers''), but only if you have discretionary authority to hire 
and fire managers and reallocate assets among them; or
    (d) you are a broker-dealer and treat the account as a brokerage 
account, but only if you have discretionary authority over the 
account.
    You do not provide continuous and regular supervisory or 
management services for an account if you:
    (a) provide market timing recommendations (i.e., to buy or 
sell), but have no ongoing management responsibilities;
    (b) provide only impersonal investment advice (e.g., market 
newsletters);
    (c) make an initial asset allocation, without continuous and 
regular monitoring and reallocation; or
    (d) provide advice on an intermittent or periodic basis (such as 
upon client request, in response to a market event, or on a specific 
date (e.g., the account is reviewed and adjusted quarterly)).
    (4) Value of Assets Under Management. Determine your assets 
under management based on the current market value of the assets as 
determined within 90 days prior to the date of filing this Form ADV. 
Determine market value using the same method you used to report 
account values to clientsor to calculate fees for investment 
advisory services.
    (5) Example. This is an example of the method of determining 
whether a client account may be included as assets under management.
    A client's portfolio consists of the following:

$ 6,000,000                           stocks and bonds
$ 1,000,000                           cash and cash equivalents
$ 3,000,000                           non-securities (collectibles,
                                       commodities, real estate, etc.)
-------------------------------------
$10,000,000                           Total Assets
=====================================

    First, is the account a securities portfolio? The account is a 
securities portfolio because securities as well as cash and cash 
equivalents (which you have chosen to include as securities) 
($6,000,000 + $1,000,000 = $7,000,000) comprise at least 50% of the 
value of the account (here, 70%). (See Instruction 5.b(1)).
    Second, does the account receive continuous and regular 
supervisory or management services? The entire account is

[[Page 57456]]

managed on a discretionary basis and is provided ongoing supervisory 
and management services, and therefore receives continuous and 
regular supervisory or management services. (See Instruction 
5.b(3)).
    Third, what is the entire value of the account? The entire value 
of the account ($10,000,000) is included in the calculation of the 
adviser's total assets under management.

6. Item 10: Control Persons

    If you are a ``separately identifiable department or division'' 
(SID) of a bank, identify on Schedule A your bank's executive 
officers who are directly engaged in managing, directing, or 
supervising your investment advisory activities, and list any other 
persons designated by your bank's board of directors as responsible 
for the day-to-day conduct of your investment advisory activities, 
including supervising employees performing investment advisory 
activities.

7. Additional Information.

    If you believe your response to an item in Form ADV Part 1A 
requires further explanation, or if you wish to provide additional 
information, you may do so on Schedule D, in the Miscellaneous 
section. Completion of this section is optional.

Form ADV (Paper Version); Uniform Application for Investment Adviser 
Registration

Form ADV: Instructions for Part 1B

    These instructions explain how to complete certain items in Part 
1B of Form ADV.

1. Item 2.B: Bond Information

    Your home state may require you to maintain a bond. For example, 
a bond may be required if you have custody of or discretionary 
authority over your client's funds or securities. A bond also may be 
required if your home state requires you to maintain a minimum net 
worth and you do not have that net worth. For additional information 
concerning bond requirements, you should consult your home state's 
investment adviser laws or contact your home state's securities 
authority. See Form ADV General Instruction 1.

2. Item 2.H: Financial Planning Services

    Item 2.H. asks about financial planning services you have 
provided to your clients. This question assumes that you have been 
providing financial planning services for some time. Your response 
to this question should reflect your current advisory business 
(i.e., at the time you file your Form ADV). If you are a newly-
formed adviser, skip Item 2.H.

3. Item 2.I: Custody

    Item 2.I. asks about practices that you engage in that may 
indicate whether you have custody of client's funds or securities. 
This question assumes that you have been operating your advisory 
business for some time. Your response to this question should 
reflect your current advisory business (i.e., at the time you file 
your Form ADV). If you are a newly-formed adviser, base your 
response to Item 2.I. on the way you expect to conduct your business 
during the next year.

GLOSSARY OF TERMS

    1. Advisory Affiliate: Your advisory affiliates are (1) all of 
your officers, partners, or directors (or any person performing 
similar functions); (2) all persons directly or indirectly 
controlling or controlled by you; and (3) all of your current 
employees (other than employees performing only clerical, 
administrative, support or similar functions).
    If you are a ``separately identifiable department or division'' 
(SID) of a bank, your advisory affiliates are: (1) all of your 
bank's employees who perform your investment advisory activities 
(other than clerical or administrative employees); (2) all persons 
designated by your bank's board of directors as responsible for the 
day-to-day conduct of your investment advisory activities (including 
supervising the employees who perform investment advisory 
activities); (3) all persons who directly or indirectly control your 
bank, and all persons whom you control in connection with your 
investment advisory activities; and (4) all other persons who 
directly manage any of your investment advisory activities 
(including directing, supervising or performing your advisory 
activities), all persons who directly or indirectly control those 
management functions, and all persons whom you control in connection 
with those management functions. [Used in: Part 1A, Item 11; Part 
1B, Item 2]
    2. Annual Updating Amendment: Within 90 days after your firm's 
fiscal year end, your firm must file an ``annual updating 
amendment,'' which is an amendment to your firm's Form ADV that 
reaffirms the eligibility information contained in Item 2 of Part 1A 
and updates the responses to any other item for which the 
information is no longer accurate. [Used in: General Instructions; 
Part 1A Instructions, Introductory Text, Item 2]
    3. Charged: Being accused of a crime in a formal complaint, 
information, or indictment (or equivalent formal charge). [Used in: 
Part 1A, Item 11; DRPs]
    4. Client: Any of your firm's investment advisory clients. This 
term includes clients from which your firm receives no compensation, 
such as members of your family. If your firm also provides other 
services (e.g., accounting services), this term does not include 
clients that are not investment advisory clients. [Used throughout 
Form ADV and Form ADV-W]
    5. Control: Control means the power, directly or indirectly, to 
direct the management or policies of a person, whether through 
ownership of securities, by contract, or otherwise.
     Each of your firm's officers, partners, or directors 
exercising executive responsibility (or persons having similar 
status or functions) is presumed to control your firm.
     A person is presumed to control a corporation if the 
person: (i) directly or indirectly has the right to vote 25 percent 
or more of a class of the corporation's voting securities; or (ii) 
has the power to sell or direct the sale of 25 percent or more of a 
class of the corporation's voting securities.
     A person is presumed to control a partnership if the 
person has the right to receive upon dissolution, or has 
contributed, 25 percent or more of the capital of the partnership.
     A person is presumed to control a limited liability 
company (``LLC'') if the person: (i) directly or indirectly has the 
right to vote 25 percent or more of a class of the interests of the 
LLC; (ii) has the right to receive upon dissolution, or has 
contributed, 25 percent or more of the capital of the LLC; or (iii) 
is an elected manager of the LLC.
     A person is presumed to control a trust if the person 
is a trustee or managing agent of the trust.
    Used in: General Instructions; Part 1A, Instructions, Items 2, 
7, 10, 11, 12, Schedules A, B, C, D; Regulatory DRP]
    6. Custody: Your firm has custody if it directly or indirectly 
holds client funds or securities, has any authority to obtain 
possession of them, or has the ability to appropriate them. Your 
firm has custody, for example, if it has a general power of attorney 
over a client's account or signatory power over a client's checking 
account. See Advisers Act rule 206(4)-2. [Used in: Part 1A, Item 9; 
Part 1B, Instructions, Item 2]
    7. Discretionary Authority: Your firm has discretionary 
authority if it has the authority to decide which securities to 
purchase and sell for the client. Your firm also has discretionary 
authority if it has the authority to decide which investment 
advisers to retain on behalf of the client. [Used in: Part 1A, 
Instructions, Item 8; Part 1B, Instructions]
    8. Employee: This term includes an independent contractor who 
performs advisory functions on your behalf. [Used in: Part 1A, 
Instructions, Items 1, 5, 7, 11]
    9. Enjoined: This term includes being subject to a mandatory 
injunction, prohibitory injunction, preliminary injunction, or a 
temporary restraining order. [Used in: Part 1A, Item 11; DRPs]
    10. Felony: For jurisdictions that do not differentiate between 
a felony and a misdemeanor, a felony is an offense punishable by a 
sentence of at least one year imprisonment and/or a fine of at least 
$1,000. The term also includes a general court martial. [Used in: 
Part 1A, Item 11; DRPs]
    11. Foreign Financial Regulatory Authority: This term includes 
(1) a foreign securities authority; (2) another governmental body or 
foreign equivalent of a self-regulatory organization empowered by a 
foreign government to administer or enforce its laws relating to the 
regulation of investment-related activities; and (3) a foreign 
membership organization, a function of which is to regulate the 
participation of its members in the activities listed above. [Used 
in: Part 1A, Items 1, 11; DRPs]
    12. Found: This term includes adverse final actions, including 
consent decrees in which the respondent has neither admitted nor 
denied the findings, but does not include agreements, deficiency 
letters, examination reports, memoranda of understanding, letters of 
caution, admonishments, and similar informal resolutions of matters. 
[Used in: Part 1A, Item 11; Part 1B, Item 2]
    13. Government Entity: Any state or political subdivision of a 
state, including (i)

[[Page 57457]]

any agency, authority, or instrumentality of the state or political 
subdivision; (ii) a plan or pool of assets controlled by the state 
or political subdivision or any agency, authority or instrumentality 
thereof; and (iii) any officer, agent, or employee of the state or 
political subdivision or any agency, authority or instrumentality 
thereof, acting in their official capacity. [Used in: Part 1A, Item 
5]
    14. High Net Worth Individual: An individual with at least 
$750,000 managed by you, or whose net worth your firm reasonably 
believes exceeds $1,500,000, or who is a ``qualified purchaser'' as 
defined in section 2(a)(51)(A) of the Investment Company Act of 
1940. The net worth of an individual may include assets held jointly 
with his or her spouse. [Used in: Part 1A, Item 5]
    15. Home State: If your firm is registered with a state 
securities authority, your firm's ``home state'' is the state where 
it maintains its principal office and place of business. [Used in: 
Part 1B, Instructions]
    16. Impersonal Investment Advice: Investment advisory services 
that do not purport to meet the objectives or needs of specific 
individuals or accounts. [Used in: Part 1A, Instructions]
    17. Investment-Related: Activities that pertain to securities, 
commodities, banking, insurance, or real estate (including, but not 
limited to, acting as or being associated with an investment 
adviser, broker-dealer, municipal securities dealer, government 
securities broker or dealer, issuer, investment company, futures 
sponsor, bank, or savings association). [Used in: Part 1A, Item 11; 
DRPs; Part 1B, Item 2]
    18. Involved: Engaging in any act or omission, aiding, abetting, 
counseling, commanding, inducing, conspiring with or failing 
reasonably to supervise another in doing an act. [Used in: Part 1A, 
Item 11]
    19. Management Persons: Anyone with the power to exercise, 
directly or indirectly, a controlling influence over your firm's 
management or policies, or to determine the general investment 
advice given to the clients of your firm.
    Generally, all of the following are management persons:
     Your firm's principal executive officers, such as your 
chief executive officer, chief financial officer, chief operations 
officer, chief legal officer, and chief compliance officer; your 
directors, general partners, or trustees; and other individuals with 
similar status or performing similar functions;
     The members of your firm's investment committee or 
group that determines general investment advice to be given to 
clients; and
     If your firm does not have an investment committee or 
group, the individuals who determine general investment advice 
provided to clients (if there are more than five people, you may 
limit your firm's response to their supervisors). [Used in: Part 1B, 
Item 2]
    20. Managing Agent: A managing agent of an investment adviser is 
any person, including a trustee, who directs or manages (or who 
participates in directing or managing) the affairs of any 
unincorporated organization or association that is not a 
partnership. [Used in: General Instructions; Form ADV-NR]
    21. Minor Rule Violation: A violation of a self-regulatory 
organization rule that has been designated as ``minor'' pursuant to 
a plan approved by the SEC. A rule violation may be designated as 
``minor'' under a plan if the sanction imposed consists of a fine of 
$2,500 or less, and if the sanctioned person does not contest the 
fine. (Check with the appropriate self-regulatory organization to 
determine if a particular rule violation has been designated as 
``minor'' for these purposes.) [Used in: Part 1A, Item 11]
    22. Misdemeanor: For jurisdictions that do not differentiate 
between a felony and a misdemeanor, a misdemeanor is an offense 
punishable by a sentence of less than one year imprisonment and/or a 
fine of less than $1,000. The term also includes a special court 
martial. [Used in: General Instructions; Part 1A, Item 11; DRPs]
    23. NASDR CRD or CRD: The Web Central Registration Depository 
(``CRD'') system operated by the National Association of Securities 
Dealers Regulation, Inc. (``NASDR'') for the registration of broker-
dealers and broker-dealer representatives. [Used in: Part 1A, Item 
1; Form ADV-W, Item 1]
    24. Non-Resident: (a) an individual who resides in any place not 
subject to the jurisdiction of the United States; (b) a corporation 
incorporated in and having its principal office and place of 
business in any place not subject to the jurisdiction of the United 
States; and (c) a partnership or other unincorporated organization 
or association that has its principal office and place of business 
in any place not subject to the jurisdiction of the United States. 
[Used in: General Instructions; Form ADV-NR]
    25. Notice Filing: SEC-registered advisers may have to provide 
state securities authorities with copies of documents that are filed 
with the SEC. These filings are referred to as ``notice filings.'' 
[Used in: General Instructions; Part 1A, Item 2; Execution Page(s); 
Form ADV-W]
    26. Order: A written directive issued pursuant to statutory 
authority and procedures, including an order of denial, exemption, 
suspension, or revocation. Unless included in an order, this term 
does not include special stipulations, undertakings, or agreements 
relating to payments, limitations on activity or other restrictions. 
[Used in: Part 1A, Items 2 and 11; Schedule D; DRPs]
    27. Performance-Based Fee: An investment advisory fee based on a 
share of capital gains on, or capital appreciation of, client 
assets. A fee that is based upon a percentage of assets that you 
manage is not a performance-based fee. [Used in: Part 1A, Item 5]
    28. Person: A natural person (an individual) or a company. A 
company includes any partnership, corporation, trust, limited 
liability company (''LLC''), limited liability partnership 
(``LLP''), or other organization. [Used throughout Form ADV and Form 
ADV-W]
    29. Principal Place of Business or Principal Office and Place of 
Business: Your firm's executive office from which your firm's 
officers, partners, or managers direct, control, and coordinate the 
activities of your firm. [Used in: Part 1A, Instructions, Items 1 
and 2; Schedule D; Form ADV-W, Item 1]
    30. Proceeding: This term includes a formal administrative or 
civil action initiated by a governmental agency, self-regulatory 
organization or foreign financial regulatory authority; a felony 
criminal indictment or information (or equivalent formal charge); or 
a misdemeanor criminal information (or equivalent formal charge). 
This term does not include other civil litigation, investigations, 
or arrests or similar charges effected in the absence of a formal 
criminal indictment or information (or equivalent formal charge). 
[Used in: Part 1A, Item 11; DRPs; Part 1B, Item 2]
    31. Related Person: Any advisory affiliate and any person that 
is under common control with your firm. [Used in: Part 1A, Items 7, 
8, 9; Schedule D; Form ADV-W, Item 3]
    32. Self-Regulatory Organization or SRO: Any national securities 
or commodities exchange, registered securities association, or 
registered clearing agency. For example, the Chicago Board of Trade 
(``CBOT''), National Association of Securities Dealers, Inc. 
(``NASD'') and New York Stock Exchange (``NYSE'') are self-
regulatory organizations. [Used in: Part 1A, Item 11; DRPs; Part 1B, 
Item 2]
    33. Sponsor: A sponsor of a wrap fee program sponsors, 
organizes, or administers the program or selects, or provides advice 
to clients regarding the selection of, other investment advisers in 
the program. [Used in: Part 1A, Item 5; Schedule D]
    34. State Securities Authority: The securities commission (or 
any agency or office performing like functions) of any state of the 
United States, the District of Columbia, Puerto Rico, the Virgin 
Islands, or any other possession of the United States. [Used 
throughout Form ADV]
    35. Wrap Fee Program: Any advisory program under which a 
specified fee or fees not based directly upon transactions in a 
clients account is charged for investment advisory services (which 
may include portfolio management or advice concerning the selection 
of other investment advisers) and the execution of client 
transactions. [Used in: Part 1, Item 5; Schedule D]
BILLING CODE 8010-01-U

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BILLING CODE 8010-01-C

[[Page 57512]]

Form ADV (Paper Version); Uniform Application for Investment Adviser 
Registration

Domestic Investment Adviser Execution Page

    You must complete the following Execution Page to Form ADV. This 
execution page must be signed and attached to your initial 
application for SEC registration and all amendments to registration.

Appointment of Agent for Service of Process

    By signing this Form ADV Execution Page, you, the undersigned 
adviser, irrevocably appoint the Secretary of State or other legally 
designated officer, of the state in which you are submitting a 
notice filing, as your agents to receive service, and agree that 
such persons may accept service on your behalf, of any notice, 
subpoena, summons, order instituting proceedings, demand for 
arbitration, or other process or papers, and you further agree that 
such service may be made by registered or certified mail, in any 
federal or state action, administrative proceeding or arbitration 
brought against you in any place subject to the jurisdiction of the 
United States, if the action, proceeding or arbitration (a) arises 
out of any activity in connection with your investment advisory 
business that is subject to the jurisdiction of the United States, 
and (b) is founded, directly or indirectly, upon the provisions of: 
(i) the Securities Act of 1933, the Securities Exchange Act of 1934, 
the Trust Indenture Act of 1939, the Investment Company Act of 1940, 
or the Investment Advisers Act of 1940, or any rule or regulation 
under any of these acts, or (ii) the laws of the state in which you 
maintain your principal office and place of business or of any state 
in which you maintain your principal office and place of business 
and any other state in which you are submitting a notice filing.

Signature

    I, the undersigned, sign this Form ADV on behalf of, and with 
the authority of, the investment adviser. The investment adviser and 
I both certify, under penalty of perjury under the laws of the 
United States of America, that the information and statements made 
in this ADV, including exhibits and any other information submitted, 
are true and correct, and that I am signing this Form ADV Execution 
Page as a free and voluntary act.
    I certify that investment adviser will, within five days of a 
state's request, provide to that state a copy of the investment 
adviser's Form ADV Part II.
    I certify that the adviser's books and records will be preserved 
and available for inspection as required by law. Finally, I 
authorize any person having custody or possession of these books and 
records to make them available to federal and state regulatory 
representatives.

Signature:-------------------------------------------------------------
Printed Name:----------------------------------------------------------
Adviser CRD Number:----------------------------------------------------
Date:------------------------------------------------------------------
Title:-----------------------------------------------------------------

Form ADV (Paper Version); Uniform Application for Investment Adviser 
Registration

State-Registered Investment Adviser Execution Page

    You must complete the following Execution Page to Form ADV. This 
execution page must be signed and attached to your initial 
application for state registration and all amendments to 
registration.

1. Appointment of Agent for Service of Process

    By signing this form ADV Execution Page, you, the undersigned 
adviser, irrevocably appoint the legally designated officers and 
their successors, of the state in which you maintain your principal 
office and place of business and any other state in which you are 
applying for registration or amending your registration, as your 
agents to receive service, and agree that such persons may accept 
service on your behalf, of any notice, subpoena, summons, order 
instituting proceedings, demand for arbitration, or other process or 
papers, and you further agree that such service may be made by 
registered or certified mail, in any federal or state action, 
administrative proceeding or arbitration brought against you in any 
place subject to the jurisdiction of the United States, if the 
action, proceeding or arbitration (a) arises out of any activity in 
connection with your investment advisory business that is subject to 
the jurisdiction of the United States, and (b) is founded, directly 
or indirectly, upon the provisions of: (i) The Securities Act of 
1933, the Securities Exchange Act of 1934, the Trust Indenture Act 
of 1939, the Investment Company Act of 1940, or the Investment 
Advisers Act of 1940, or any rule or regulation under any of these 
acts, or (ii) the laws of the state in which you maintain your 
principal office and place of business or of any state in which you 
are applying for registration, or amending your registration.

2. State-Registered Investment Adviser Affidavit

    If you are subject to state regulation, by signing this Form 
ADV, you represent that, you are in compliance with the registration 
requirements of the state in which you maintain your principal place 
of business and are in compliance with the bonding, capital, and 
recordkeeping requirements of that state.

Signature

    I, the undersigned, sign this Form ADV on behalf of, and with 
the authority of, the investment adviser. The investment adviser and 
I both certify, under penalty of perjury under the laws of the 
United States of America, that the information and statements made 
in this ADV, including exhibits and any other information submitted, 
are true and correct, and that I am signing this Form ADV Execution 
Page as a free and voluntary act.
    I certify that the adviser's books and records will be preserved 
and available for inspection as required by law. Finally, I 
authorize any person having custody or possession of these books and 
records to make them available to federal and state regulatory 
representatives.
Signature:
----------------------------------------------------------------------
Printed Name:
----------------------------------------------------------------------
Adviser CRD Number:
----------------------------------------------------------------------
Date:
----------------------------------------------------------------------
Title:
----------------------------------------------------------------------

Form ADV (Paper Version); Uniform Application for Investment Adviser 
Registration

NON-RESIDENT INVESTMENT ADVISER EXECUTION PAGE 1

    You must complete the following Execution Page to Form ADV. This 
execution page must be signed and attached to your initial 
application for SEC registration and all amendments to registration.

1. Appointment of Agent for Service of Process

    By signing this Form ADV Execution Page, you, the undersigned 
adviser, irrevocably appoint each of the Secretary of the SEC, and 
the Secretary of State or other legally designated officer, of any 
other state in which you are submitting a notice filing, as your 
agents to receive service, and agree that such persons may accept 
service on your behalf, of any notice, subpoena, summons, order 
instituting proceedings, demand for arbitration, or other process or 
papers, and you further agree that such service may be made by 
registered or certified mail, in any federal or state action, 
administrative proceeding or arbitration brought against you in any 
place subject to the jurisdiction of the United States, if the 
action, proceeding or arbitration (a) arises out of any activity in 
connection with your investment advisory business that is subject to 
the jurisdiction of the United States, and (b) is founded, directly 
or indirectly, upon the provisions of: (i) The Securities Act of 
1933, the Securities Exchange Act of 1934, the Trust Indenture Act 
of 1939, the Investment Company Act of 1940, or the Investment 
Advisers Act of 1940, or any rule or regulation under any of these 
acts, or (ii) the laws of any state in which you are submitting a 
notice filing.

2. Appointment and Consent: Effect on Partnerships

    If you are organized as a partnership, this irrevocable power of 
attorney and consent to service of process will continue in effect 
if any partner withdraws from or is admitted to the partnership, 
provided that the admission or withdrawal does not create a new 
partnership. If the partnership dissolves, this irrevocable power of

[[Page 57513]]

attorney and consent shall be in effect for any action brought 
against you or any of your former partners.

3. Non-Resident Investment Adviser Undertaking Regarding Books and 
Records

    By signing this Form ADV, you also agree to provide, at your own 
expense, to the U.S. Securities and Exchange Commission at its 
principal office in Washington D.C., at any Regional or District 
Office of the Commission, or at any one of its offices in the United 
States, as specified by the Commission, correct, current, and 
complete copies of any or all records that you are required to 
maintain under Rule 204-2 under the Investment Advisers Act of 1940. 
This undertaking shall be binding upon you, your heirs, successors 
and assigns, and any person subject to your written irrevocable 
consents or powers of attorney or any of your general partners and 
managing agents.

Signature

    I, the undersigned, sign this Form ADV on behalf of, and with 
the authority of, the non-resident investment adviser. The 
investment adviser and I both certify, under penalty of perjury 
under the laws of the United States of America, that the information 
and statements made in this ADV, including exhibits and any other 
information submitted, are true and correct, and that I am signing 
this Form ADV Execution Page as a free and voluntary act.
    I certify that the adviser's books and records will be preserved 
and available for inspection as required by law. Finally, I 
authorize any person having custody or possession of these books and 
records to make them available to federal and state regulatory 
representatives.

Signature:-------------------------------------------------------------
Date:------------------------------------------------------------------
Printed Name:----------------------------------------------------------
Title:-----------------------------------------------------------------
Adviser CRD Number:----------------------------------------------------

APPENDIX B

Form ADV-W (Paper Version); Notice of Withdrawal From Registration as 
an Investment Adviser

Instructions for Form ADV-W

    NOTE: Unless the context clearly indicates otherwise, all terms 
used in the Form have the same meaning as in the Investment Advisers 
Act of 1940 and in the General Rules and Regulations of the 
Commission thereunder (17 Code of Federal Regulations 275).
    1. We would like to withdraw from registration as an investment 
adviser. What do we need to do?
    You must determine whether you are filing for partial withdrawal 
or full withdrawal.
    A partial withdrawal is when you are withdrawing from investment 
adviser registration with some, but not all, of the jurisdictions 
where you are registered (or have an application for registration 
pending). For example, you would file for partial withdrawal if you 
are switching from state registration to SEC registration (or vice 
versa). Similarly, you would file for partial withdrawal if you are 
a state-registered adviser and are withdrawing from some, but not 
all, of the states with which you are registered (or have an 
application for registration pending).
    A full withdrawal is when you are withdrawing from all of the 
jurisdictions with which you are registered (or have an application 
pending).
    If you are filing for partial withdrawal and switching from SEC 
to state registration, you must complete the Status Section, Items 
1A through 1D, and the Execution Section. You do not need to 
complete Items 1E through 8 of Form ADV-W.
    If you are filing for partial withdrawal and switching from 
state to SEC registration, you must complete the entire Form ADV-W.
    If you are registered only with the state securities authorities 
and withdrawing from some, but not all, of the states where you are 
registered, you must complete the entire Form ADV-W.
    If you are filing for full withdrawal, you must complete the 
entire Form ADV-W.
    2. We are going out of business. Does this change how we would 
answer particular questions on the Form ADV-W?
    Yes. The purpose of Item 1D is so that we can contact you if the 
Form ADV-W is deficient or if we have questions. If you are going 
out of business, make sure you list in Item 1D an address and phone 
number at which we can reach the contact employee.
    3. I am filing for partial withdrawal. How do I complete Item 2?
    If you are ceasing advisory business in any of the jurisdictions 
from which you are withdrawing, check ``yes.'' On the next line, 
provide the date on which you are ceasing advisory business in these 
jurisdictions (however, if you cease conducting advisory business on 
different dates in different jurisdictions, you must complete a 
separate Form ADV-W for each different date). The date you provide 
in this blank must be on or before the date you file Form ADV-W. 
Then, provide the reasons you are filing for withdrawal (regardless 
of whether you are filing for partial or complete withdrawal).
    You are permitted to ``post-date'' the Form ADV-W to December 31 
anytime between November 1 and December 31. You are permitted to 
enter a cease date of December 31 to avoid being charged state 
renewal fees in jurisdictions form which you are withdrawing (the 
IARD does not operate during the last week of each year and you are 
unable to make any filings during that time). However, you cannot 
enter any date other than December 31, and you can only enter a 
December 31 cease date after November 1.
    4. I have completed Form ADV-W and filed it with the SEC. When 
will it become effective?
    Your Form ADV-W will become effective when it is filed with the 
SEC. However, your Form ADV-W will not be deemed ``filed'' until the 
SEC receives it and determines that it is not deficient. The 
effective date of a Form ADV-W filed with the state securities 
authorities may be different.
    5. How should I file my Form ADV-W?
    You are required to file Form ADV-W electronically on the IARD.
    In the event you are unable to submit an electronic filing, you 
must apply for a temporary or continuing hardship exemption pursuant 
to rule 203-3. If you can rely on a temporary or continuing hardship 
exemption, you must mail one manually signed Form ADV-W and one copy 
to: IARD Document Processing, NASD Regulation, Inc., P.O. Box 9495, 
Gaithersburg, MD 20898-9495.
    Whether you file on the IARD or are permitted to submit paper 
filings, you must preserve in your records a copy of the Form ADV-W 
that you file with the SEC.
    6. What are the Schedules to Form ADV-W?
    Form ADV-W contains two Schedules, Schedule W1 and W2. Your 
answers to Form ADV-W will determine whether you are required to 
complete both Schedules, or only Schedule W1.
    Schedule W1 is a ``continuing page'' for Item 5 and a ``response 
page'' for Item 8. The names of individuals listed on Schedule W1 
must be given in full. If you have assigned advisory contracts to 
another person (as indicated on Item 5 of Form ADV-W), you must 
complete Section 5 of Schedule W1. If you are filing for full 
withdrawal or you are a state-registered investment adviser, you 
must provide the name of each person who has or will have custody or 
possession of your books and records, and each location where the 
records are or will be kept (Item 8). You may have to complete 
multiple Schedule W1s, depending on the number of persons who have 
or will have custody or possession of your books and records and/or 
the number of locations where your records are or will be kept. 
Instruction number seven, below, provides several examples that 
should help you properly respond to Item 8 to Form ADV-W.
    Schedule W2 requires basic financial information relating to 
your investment advisory business. If you check ``yes'' to Items 3, 
4, or 6, you are required to complete Schedule W2.
    7. Questions about Item 8. The following examples are intended 
to assist you in completing Section 8 of Schedule W1 for any persons 
who have or will have custody of your books and records, and the 
location(s) at which those records are or will be kept.
    a. After I withdraw from registration, two persons (Persons A 
and B) will have custody of my books and records, but my books and 
records will be kept at a single location. How should I complete the 
Schedule W1?
    You would complete two Schedules W1. The first would list Person 
A, and the location at which your books and records will be kept. 
You would complete a second Schedule W1 that would list Person B, 
and would list (again) the location at which your books and records 
will be kept.

[[Page 57514]]

    b. After I withdraw from registration, only one person will have 
custody of my books and records, but they will be kept at three 
locations (Locations X, Y and Z). How should I complete the Schedule 
W1?
    You would complete three Schedules W1. The first would list the 
person that will have custody of your books and records, and 
Location X. The second Schedule W1 would list (again) the person 
that has or will have custody of your books and records, and 
Location Y. The third Schedule W1 would list (again) the person that 
has or will have custody of your books and records, and Location Z.
    c. After I withdraw from registration, two people (Persons A and 
B) will have custody of my books and records, and my books and 
records will be kept at two locations (Locations Y and Z). Each 
person would have custody of the books and records that are kept at 
both locations. how should I complete the Schedule W1?
    You would complete four Schedule W1. The first would list Person 
A and Location Y. The second Schedule W1 would list (again) Person 
A, and would list location Z. The third Schedule W1 would list 
Person B and Location Y, and fourth Schedule W1 would list Person B 
and Location Z. On each Schedule W1, you should briefly describe the 
records that are kept at each location (e.g., business and trading 
records from 1996 through 1999).
    8. Who should sign the Form ADV-W
    Copies of the Form ADV-W you file with the SEC must be executed 
by a person you have authorized to file the Form. If you are a sole 
proprietor, you must sign the Form; if you are a partnership, a 
general partner must sign the Form in the name of the partnership; 
if you are an unincorporated organization or association that is not 
a partnership, the managing agent (an authorized person who directs 
or manages or who participates in the directing or managing of its 
affairs) must sign the Form in the name of the organization or 
association; if you are a corporation, a principal officer duly 
authorized must sign the Form in the name of the corporation. If an 
officer of any entity is signing the Form, the officer's title must 
be given.
    9. What if I need more space to provide additional information?
    If you are electronically, add any additional information in the 
text box asking you to ``describe the books and records kept at this 
location.'' If you are filing on paper, use the reverse side of 
Schedule W1 to provide any additional information.
    10. What if I do not follow these instructions when completing 
the Form ADV-W?
    If you do not prepare and execute the Form ADV-W as required by 
these instructions, SEC staff may return the form to you for 
correction. The SEC's acceptance of the Form, however, is not a 
finding that you have filed the Form ADV-W as required or that the 
information submitted is true, correct or complete.
    SEC's COLLECTION OF INFORMATION. An agency may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless it displays a currently valid control number. 
Section 203(h) of the Advisers Act authorizes the Commission to 
collect the information on this Form from applicants. See 15 U.S.C. 
Secs. 80b-3(h). Filing of this Form is mandatory for an investment 
adviser to withdraw from registration. The principal purpose of this 
collection of information is to enable the Commission to verify that 
the activities of an investment adviser seeking to withdraw from 
registration do not require the investment adviser to be registered 
and to determine whether terms and conditions should be imposed upon 
a registrant's withdrawal. The Commission will maintain files of the 
information on Form ADV-W, and will make the information publicly 
available. Any member of the public may direct to the Commission any 
comments concerning the accuracy of the burden estimate on page one 
of Form ADV-W, and any suggestions for reducing this burden. This 
collection of information has been reviewed by the Office of 
Management and Budget in accordance with the clearance requirements 
of 44 U.S.C. Sec. 3507. The applicable Privacy Act system of records 
is SEC-2, and the routine uses of the records are set forth at 40 
Federal Register 39255 (Aug. 27, 1975) and 41 FR 5318 (Feb. 5, 
1976).
BILLING CODE 8010-01-U

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[FR Doc. 00-23888 Filed 9-21-00; 8:45 am]
BILLING CODE 8010-01-U