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COVID-19: investment fund and adviser relief

The Securities and Exchange Commission (SEC) is granting certain investment funds and investment advisers extra time to file certain reports with the commission due to the impact of COVID-19.

Included within their release, the SEC said, “The health and safety of all participants in the securities markets is of paramount importance, and the Commission recognizes that investment advisers and other market participants continue to face challenges in meeting the requirements of the federal securities laws addressed in the Original Order in a timely manner.”

On March 13, 2020, the SEC issued Release No. 5463, the “Original Order” referred to above, "Order Under Section 206A of the Investment Advisors Act of 1940 Granting Exemptions from Specified Provisions of the Investment Advisors Act and Certain Rules Thereunder," which provided relief for certain Form ADV and Form PF requirements for certain filing obligations due on or after March 13, 2020, but prior to April 30, 2020.

On March 25, 2020, the SEC issued Release No. IA-5469 (the Order), extending the time period for relief from April 30, 2020, to June 30, 2020. This order supersedes Release No. 5463. It is worth noting that the Order now encompasses certain Q1 2020 filings.

During the relief period, Registered Investment Advisors (RIAs) are exempt from the following requirements, given the conditions are met: a) filing an amendment to Form ADV under Advisers Act Rule 204-1; and b) delivering Form ADV Part 2 (or a summary of material changes) to existing clients under Advisers Act Rule 204-3(b)(2) and (b)(4). In addition, RIAs that are required to file Form PF under the Advisers Act Rule 204(b) and 204(b)-1 are exempt from the requirement. Exempt Reporting Advisers (ERAs) are exempt from the requirement to file reports on Form ADV under Advisers Act Rule 204-4.

In order for investment advisers to be eligible for relief, certain conditions must be met. To take advantage of the Order, the RIA or ERA must be unable to meet the original filing deadline or delivery requirement “due to circumstances related to current or potential effects of COVID-19.” If an investment adviser is relying on the Order for exemption from delivering Form ADV Part 2, the Commission must be notified via email ([email protected]) and it must be disclosed on the investment advisers’ public website. If an investment adviser is relying on the Order for exemption from filing Form PF, the Commission must be notified via email ([email protected]). The final condition is that the aforementioned filings are delivered or filed as soon as practicable, but no later than 45 days from the original due date.

The Original Order, issued March 13, 2020, required an investment adviser to also provide the SEC with a description of why it is unable to meet the original deadlines and with an estimated date of filing. However, these are no longer required per the Order issued March 25, 2020. An investment adviser need only communicate that they are relying upon the Order.

On March 23, 2020, prior to the Order, but after the Original Order, the SEC’s Office of Compliance Inspections and Examinations (OCIE) released the following in a public statement, “OCIE is fully aware of the regulatory relief that was provided to registrants in response to COVID-19…OCIE believes it is important to communicate to registrants that reliance on regulatory relief will not be a risk factor utilized in determining whether OCIE commences an examination.  We encourage registrants to utilize available regulatory relief as needed.”

Investment advisers are encouraged to reach out to SEC staff directly with any questions or concerns related to the impacts of COVID-19.

Baker Tilly COVID-19 support

During this uncertain time, Baker Tilly is ready to help you with practical advice on informing and supporting your employees as well as keeping your business running.

Contact our COVID-19 support team

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