[Federal Register Volume 68, Number 137 (Thursday, July 17, 2003)]
[Rules and Regulations]
[Pages 42247-42250]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-18122]



[[Page 42247]]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 275 and 279

[Release Nos. 34-48167; IA-2144; File No. S7-10-00]
RIN 3235-AD21


Electronic Filing by Investment Advisers; Amendments To Form ADV; 
Technical Amendments

AGENCY: Securities and Exchange Commission.

ACTION: Final rule; technical amendments.

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SUMMARY: The Commission is adopting technical revisions to Forms ADV, 
ADV-W and ADV-H and related rules under the Investment Advisers Act of 
1940, which were published in the Federal Register on September 22, 
2000 (65 FR 57437). The amendments are designed to aid advisers in the 
completion and filing of Forms ADV, ADV-W and ADV-H by clarifying 
certain instructions to the forms.

EFFECTIVE DATE: July 11, 2003.

FOR FURTHER INFORMATION CONTACT: Don L. Evans, Senior Counsel, at 202-
942-0719, Office of Investment Adviser Regulation, Division of 
Investment Management, Securities and Exchange Commission, 450 Fifth 
Street, NW., Washington, DC 20549-0506.

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission 
(``Commission'' or ``SEC'') is adopting technical amendments to rules 
0-4, 203-1, 203-3, and 204-1 [17 CFR 275.04, 275.203-1, 275.203-3, and 
275.204-1] and to Forms ADV, ADV-W and ADV-H [17 CFR 279.1, 279.2 and 
279.3] under the Investment Advisers Act of 1940 [15 U.S.C. 80b] 
(``Advisers Act'' or ``Act''). The Commission is also withdrawing rule 
203A-6 [17 CFR 275.203A-6] under the Advisers Act.

I. Discussion

    Investment advisers today utilize the Investment Adviser 
Registration Depository (``IARD''), a one-stop electronic filing 
system, to make registration and ``notice'' filings with the SEC and 
state regulators over the Internet. In conjunction with launching 
electronic filing for advisers in 2000, the Commission adopted several 
rules and rule amendments under the Advisers Act, related to the 
IARD.\1\ Certain administrative issues have arisen regarding these 
revised rules and forms, and we are making technical amendments to 
address these issues.\2\
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    \1\ Electronic Filing by Investment Advisers; Amendments to Form 
ADV, Investment Advisers Act Release No. 1897 (Sept. 12, 2000) [65 
FR 57438 (Sept. 22, 2000)].
    \2\ In addition to the changes detailed below, we are (i) 
revising the Form ADV-H Item 1B language to refer to ``Item 12 of 
Part 1A'' of Form ADV rather than simply ``Item 12'', (ii) 
clarifying that Instruction 3 to Form ADV-W applies only to state-
registered advisers, and (iii) amending rules 203-1, 203-3 and 204-
1, the General Instructions to Form ADV, and Form ADV-W to reflect 
the correct name of the IARD operator due to a NASD corporate 
restructuring in the fall of 2002.
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II. Rule and Form Amendments

A. Rule 0-4: General Requirements of Papers

    We are amending rule 0-4 to extend filing deadlines when the IARD 
is closed to filings. Electronic filings otherwise required to be made 
in late December, when the IARD is shut down to process state renewals, 
must be filed on or before the following January 7. Other IARD filings 
required to be made on a day the IARD is closed to filings will be 
considered timely if filed on the following business day.\3\
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    \3\ Rule 0-4(a)(2) [17 CFR 275.0-4(a)(2)].
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B. Rule 204-1: Amendments to Application for Registration

    We are deleting language in rule 204-1(b) that set out the 
transition period to IARD for SEC-registered advisers; this transition 
period ended April 30, 2001.\4\ We are also amending the rule to 
clarify that advisers must file all amendments to Part 1A of Form ADV 
electronically with the IARD absent a continuing hardship exemption.
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    \4\ We are also deleting rule 203A-6, which set out the 
transition period from SEC registration for certain advisers located 
in Ohio; this transition period ended March 30, 2000.
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C. Form ADV: Uniform Application for Investment Adviser Registration; 
Part 1A, Item 7: Financial Industry Affiliations

    We are revising the instructions to Form ADV, Part 1A, Items 7A and 
7B. The change to Item 7A accommodates advisers that share personnel 
with an affiliated broker-dealer. NASD will accept a single Form U-4 
filing, through IARD, to register an individual both as the advisory 
firm's investment adviser representative and as a registered 
representative of the advisory firm's affiliated broker-dealer, 
provided the adviser names the affiliated brokerage firm on its Form 
ADV.\5\ Duplicative Form U-4 filings by an adviser and its affiliated 
broker-dealer create unnecessary burdens; as a convenience to filers, 
we are amending Part 1A, Item 7 to permit (but not require) an adviser 
to name, on Section 7.A. of Schedule D, any related persons that are 
broker-dealers.
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    \5\ The Form U-4 is the NASD uniform application for securities 
industry registration or transfer. Investment advisers submit Form 
U-4 through IARD to register investment adviser representatives with 
state securities authorities; broker-dealers submit it through the 
Central Registration Depository (CRD) for their registered 
representatives.
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    Another change, to Item 7B, allows an adviser to cross-reference to 
the Form ADV of its SEC-registered affiliate in order to disclose the 
limited partnerships and limited liability companies that the affiliate 
advises.\6\ An SEC-registered adviser may omit, from Section 7.B. of 
Schedule D, the details of LPs or LLCs managed by its related persons 
that are also SEC-registered advisers, so long as the adviser explains 
in the miscellaneous section of Schedule D that the detailed list is 
available on the related person's Form ADV.\7\ In order to pass a 
``completeness check'' on the IARD, however, all advisers that answer 
``yes'' to Item 7B must list at least one LP or LLC in Section 7.B of 
Schedule D. The IARD will not allow an adviser to file a Form ADV that 
fails the completeness check.
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    \6\ A number of advisers currently follow this procedure in 
reliance on the SEC staff response to a ``frequently asked 
question'' on the SEC's IARD website.
    \7\ This explanation must state: (1) That the adviser has 
related SEC-registered investment advisers who manage investment 
related LPs or LLCs that are not listed in Section 7.B of its 
Schedule D, (2) that complete and accurate information about those 
investment related LPs or LLCs is available in Section 7.B of 
Schedule D of the Form ADVs of the related SEC-registered advisers; 
and (3) whether the adviser's clients are solicited to invest in any 
of those LPs or LLCs. If the adviser has a related person that is a 
general partner in an investment-related LP or manager of an 
investment-related LLC, and that related person is not registered 
with the SEC as an investment adviser, the adviser must continue to 
list all LPs and LLCs of that related person in Section 7.B of its 
own Schedule D.
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III. Effective Date; Findings Under the Administrative Procedure Act

    The technical amendments adopted today shall become effective July 
11, 2003. An adviser is not required to file a separate amendment to 
its Form ADV solely to reflect these revisions. However, when it next 
files a Form ADV (including amending its Form ADV), Form ADV-W or Form 
ADV-H on or after the effective date, the adviser must use the rules 
and forms as revised.\8\ These amendments make minor, technical changes 
to the manner in which advisers submit registration information to the 
Commission through

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the IARD, or eliminate outdated or confusing material contained in the 
rules and instructions for submitting such information. Therefore, the 
Commission finds that there is good cause to adopt them as final rules. 
Moreover, the amendments impose no new obligations on advisers; they 
are ``rules of agency * * * procedure'' that fall within exceptions to 
the general notice and comment requirements of the Administrative 
Procedure Act.\9\
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    \8\ An adviser filing a Form ADV amendment through the IARD on 
or after the effective date will necessarily be submitting the 
revised version of the form. Because the revisions to Section 7.A of 
Schedule D add data fields, advisers may need to re-enter their 
responses to that Section. Advisers should review their responses to 
all of the affected sections of the Form carefully to ensure that 
they remain correct and complete.
    \9\ 5 U.S.C. 553(b)(3)(A) and (B). For similar reasons, the 
amendments do not require analysis under the Regulatory Flexibility 
Act or analysis of major rule status under the Small Business 
Regulatory Enforcement Fairness Act. See 5 U.S.C. 601(2) (for 
purposes of Regulatory Flexibility Act analyses, the term ``rule'' 
means any rule for which the agency publishes a general notice of 
proposed rulemaking); 5 U.S.C. 804(3)(C) (for purposes of 
Congressional review of agency rulemaking, the term ``rule'' does 
not include any rule of agency organization, procedure, or practice 
that does not substantially affect the rights or obligations of non-
agency parties).
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IV. Consideration of Promotion of Efficiency, Competition, and Capital 
Formation

    Section 202(c) of the Advisers Act requires the Commission, when 
engaging in rulemaking that requires it to consider or determine 
whether an action is necessary or appropriate in the public interest, 
to consider, in addition to the protection of investors, whether the 
action will promote efficiency, competition, and capital formation.\10\
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    \10\ 15 U.S.C. 80b-2(c).
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    As discussed above, the rule and form amendments will aid advisers 
in the completion of Forms ADV, ADV-W and ADV-H. The technical 
amendments may enhance efficiency further by clarifying the forms and 
their instructions, thereby improving an adviser's understanding of 
IARD and eliminating duplicative filings.
    Because the rule and form amendments apply equally to all advisers, 
we do not anticipate that any competitive disadvantages would be 
created. We do not expect the amendments, as technical changes, to have 
an effect on capital formation or the capital markets.

V. Statutory Authority

    We are adopting amendments to rule 0-4, General Requirements of 
Papers, under sections 204 and 211(a) of the Investment Advisers Act of 
1940 [15 U.S.C. 80b-4 and 80b-11(a)].
    We are adopting amendments to rule 203-1, Application for 
Investment Adviser Registration, 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 adopting amendments to rule 203-3, Hardship Exemptions, 
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 withdrawing rule 203A-6 [17 CFR 275.203A-6], Transition 
Period for Ohio Investment Advisers, under section 203(h) [15 U.S.C. 
80b-3(h)]; section 203A(c) [15 U.S.C. 80b-3a(c)]; and section 211(a) 
[15 U.S.C. 80b-11(a)] of the Investment Advisers Act of 1940.
    We are adopting amendments to rule 204-1, Amendments to Application 
for Registration, 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 adopting amendments to 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 adopting amendments to rule 279.2, Form ADV-W, under 
sections 203(h), 204, and 211(a) of the Investment Advisers Act of 1940 
[15 U.S.C. 80b-3(h), 80b-4, and 80-11(a)].
    We are adopting amendments to rule 279.3, 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)].

Need for Technical Amendment

    As published, the final regulations contain errors which need to be 
clarified.

List of Subjects in 17 CFR Parts 275 and 279

    Investment advisers, Reporting and recordkeeping requirements.

Text of Rule and Form Amendments

0
For the reasons set out in the preamble, Title 17, Chapter II of the 
Code of Federal Regulations is amended as follows:

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

0
1. The authority citation for Part 275 continues to read in part 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.
* * * * *

0
2. Paragraph (a) of Sec.  275.04 is revised to read as follows:


Sec.  275.0-4  General requirements of papers and applications.

    (a) Filings. (1) All papers required to be filed with the 
Commission shall, unless otherwise provided by the rules and 
regulations, be delivered through the mails or otherwise to the 
Securities and Exchange Commission, Washington, DC 20549. Except as 
otherwise provided by the rules and regulations, such papers shall be 
deemed to have been filed with the Commission on the date when they are 
actually received by it.
    (2) All filings required to be made electronically with the 
Investment Adviser Registration Depository (``IARD'') shall, unless 
otherwise provided by the rules and regulations in this part, be deemed 
to have been filed with the Commission upon acceptance by the IARD. 
Filings required to be made through the IARD on a day that the IARD is 
closed shall be considered timely filed with the Commission if filed 
with the IARD no later than the following business day.
    (3) Filings required to be made through the IARD during the period 
in December of each year that the IARD is not available for submission 
of filings shall be considered timely filed with the Commission if 
filed with the IARD no later than the following January 7.

    Note to Paragraph (a)(3): Each year the IARD shuts down to 
filers for several days during the end of December to process 
renewals of state notice filings and registrations. During this 
period, advisers are not able to submit filings through the IARD. 
Check the Commission's Web site at http://www.sec.gov/iard for the 
dates of the annual IARD shutdown.

* * * * *

0
3. Part 275 is amended by:
0
a. Revising the term ``NASD Regulation, Inc. (NASDR)'' to read ``NASD'' 
in: Sec. Sec.  275.203-1(d) and 275.204-1(b)(3).
0
b. Revising the term ``NASD Regulation, Inc.'' to read ``NASD'' in 
Sec.  275.203-3(b)(3).
0
c. Revising the term ``NASDR'' to read ``NASD'' in the following 
sections:
    1. 275.203-1(d);
    2. 275.203-3, Note to Paragraph (b); and
    3. 275.204-1(d) each time it appears.

0
4. Section 275.203A-6 is removed and reserved.

0
5. Section 275.204-1 is amended by:

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0
a. Adding a note at the end of paragraph (a);
0
b. Revising paragraph (b); and
0
c. Revising the first sentence of paragraph (d).
    The addition and revisions read as follows.


Sec.  275.204-1  Amendments to application for registration.

    (a) * * *

    Note to Paragraph (a): Information on how to file with the 
Investment Adviser Registration Depository (``IARD'') is available 
on our website at www.sec.gov/iard.

    (b) Electronic filing of amendments. (1) You must file all 
amendments to Part 1A of your Form ADV electronically with the IARD, 
unless you have received a continuing hardship exemption under Sec.  
275.203-3.
    (2) If you have received a continuing hardship exemption under 
Sec.  275.203-3, you must, when you are required to amend your Form 
ADV, file a completed Part 1A of Form ADV on paper with the SEC by 
mailing it to the NASD.
* * * * *
    (d) Filing fees. You must pay the NASD (the operator of the IARD) 
an initial filing fee when you first electronically file Part 1A of 
Form ADV. * * *

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

0
6. The authority citation for Part 279 continues to read as follows:

    Authority: The Investment Advisers Act of 1940, 15 U.S.C. 80b-1, 
et seq.

0
7. Form ADV (referenced in Sec.  279.1) is amended by:
0
a. In the form and instructions to the form, revising the terms 
``NASDR'', ``NASD Regulation, Inc.'', ``National Association of 
Securities Dealers Regulation, Inc. (``NASDR'')'', and ``National 
Association of Securities Dealers, Inc. (``NASD'')'' to read ``NASD'';
0
b. In the instructions to the form, revising the heading ``Supplemental 
Instructions for Transition to Electronic Filing'' to read 
``Supplemental Instructions for Electronic Filing'' and within those 
Supplemental Instructions revising the section entitled ``SEC 
Requirements''.
0
c. In Part 1A, revising the unnumbered paragraph in Item 7A. and Item 
7B.; and
0
d. In Schedule D, revising Section 7.A.
    The revisions read as follows:

    Note: The text of Form ADV does not and this amendment will not 
appear in the Code of Federal Regulations.

Form ADV
* * * * *
Supplemental Instructions for 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.
* * * * *
Part 1A
* * * * *
Item 7 Financial Industry Affiliations
* * * * *
    A. * * *
    If you checked Item 7A.(3), you must list on Section 7.A. of 
Schedule D all your related persons that are investment advisers. If 
you checked Item 7A.(1), you may elect to list on Section 7.A. of 
Schedule D all your related persons that are broker-dealers. If you 
choose to list a related broker-dealer, the IARD will accept a single 
Form U-4 to register an investment adviser representative who also is a 
broker-dealer agent (``registered rep'') of that related broker-dealer.
    B. * * *
    If ``yes,'' for each limited partnership or limited liability 
company, complete Section 7.B. of Schedule D. If, however, you are an 
SEC-registered adviser and you have related persons that are SEC-
registered advisers who are the general partners of limited 
partnerships or the managers of limited liability companies, you do not 
have to complete Section 7.B. of Schedule D with respect to those 
related advisers' limited partnerships or limited liability companies.
    To use this alternative procedure, you must state in the 
Miscellaneous Section of Schedule D:
    (1) that you have related SEC-registered investment advisers that 
manage limited partnerships or limited liability companies that are not 
listed in Section 7.B. of your Schedule D;
    (2) that complete and accurate information about those limited 
partnerships or limited liability companies is available in Section 
7.B. of Schedule D of the Form ADVs of your related SEC-registered 
advisers; and
    (3) whether your clients are solicited to invest in any of those 
limited partnerships or limited liability companies.
* * * * *
Schedule D
* * * * *
SECTION 7.A. Affiliated Investment Advisers and Broker-Dealers
You MUST complete the following information for each investment adviser 
with whom you are affiliated. You MAY complete the following 
information for each broker-dealer with whom you are affiliated. You 
must complete a separate Schedule D Page 3 for each listed affiliate.

Check only one box: [ballot] Add [ballot] Delete [ballot] Amend

Legal Name of Affiliate:

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Primary Business Name of Affiliate:
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Affiliate is (check only one box): [ballot] Investment Adviser [ballot] 
Broker-Dealer [ballot] Dual (Investment Adviser and Broker-Dealer)
Affiliated Investment Adviser's SEC File Number (if any) 801-----------
Affiliate's CRD Number (if any) ----------
* * * * *

0
8. Form ADV-W (referenced in Sec.  279.2) is amended by:
0
a. In Instruction 3, revising the first undesignated paragraph;
0
b. In Instruction 3, revising the first sentence in the second 
undesignated paragraph;
0
c. In Instruction 3, revising the second sentence in the third 
undesignated paragraph;
0
d. In Instruction 5, revise the phrase ``NASD Regulation, Inc.'' to 
read ``NASD;'' and
0
e. In the Execution section, revise the fourth sentence.
    The revisions read as follows.

    Note: The text of Form ADV-W does not and this amendment will 
not appear in the Code of Federal Regulations.

Form ADV-W
* * * * *
Instructions for Form ADV-W
* * * * *
    3. I am a state registered adviser filing for partial withdrawal. 
How do I complete Item 2?

    If you are a state registered adviser ceasing advisory business in 
any of the jurisdictions from which you are withdrawing, check ``yes.'' 
* * *

    * * * You are permitted to enter a cease date of December 31 to 
avoid being charged state renewal fees in jurisdictions from which you 
are withdrawing (during the last part of December each year the IARD 
suspends filing operations for several days to process renewals of 
state registrations and state notice filings; and you are

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unable to submit any filings during that time). * * *
Execution
    * * * I understand that if any information contained in items 1D or 
1E of this Form ADV-W is different from the information contained on 
Form ADV, the information on this Form ADV-W will replace the 
corresponding entry on the adviser's Form ADV composite available 
through IARD. * * *
* * * * *

0
9. Form ADV-H (referenced in Sec.  279.3) is amended by revising the 
phrase ``Item 12 of Form ADV'' in the third and fourth unnumbered 
paragraphs in Item 1B. to read ``Item 12 of Part 1A of Form ADV''.

    Note: Form ADV-H does not and this amendment will not appear in 
the Code of Federal Regulations.


    Dated: July 11, 2003.

    By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-18122 Filed 7-16-03; 8:45 am]
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