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Year-End Compliance Alert for Investment Managers

October 12, 2016

As we approach the final quarter of 2016, we would like to take this opportunity to remind you of the following legal, regulatory and compliance obligations that may apply to certain investment managers heading into 2017.

Investment Advisers and Exempt Reporting Advisers

Annual Amendment of Form ADV.  Each registered investment adviser (“RIA”) and exempt reporting adviser (“ERA”) must file an annual updating amendment to its Form ADV. The annual amendment must be filed within 90 days of the adviser’s fiscal year-end.

Each RIA must also provide to each client an updated Form ADV Part 2A brochure and a summary of material changes to the brochure, if any (or simply a summary of material changes, if any, accompanied by an offer to provide the updated brochure).

Form PF. An investment adviser must file Form PF if it is registered or is required to be registered with the Securities and Exchange Commission (“SEC”), advises one or more private funds and has at least $150 million in private fund assets under management. Investment advisers must file Form PF on an annual basis within 120 days of the fund’s fiscal year-end.

Investment Adviser Registration Depository (“IARD”) Renewal Fees. Annual renewal fees for SEC and state registered investment advisers as well as SEC ERAs are due to the IARD by December 16, 2016.  Please visit for more information, fee schedules and payment options.

Commodity Pool Operators and Commodity Trading Advisors

Annual Reaffirmation of CPO Exemption. Commodity pool operators (“CPOs”) and commodity trading advisors (“CTAs”) relying on an exemption from registering with the Commodity Futures Trading Commission (“CFTC”) are required to reaffirm their exemption eligibility within 60 days of the calendar year-end.

Forms CPO-PQR and CTA-PR. Registered CPOs and CTAs must file Forms CPO-PQR and CTA-PR, respectively, using the NFA’s EasyFile system. Registered CPOs must file Form CPO-PQR on a quarterly basis within 60 days of the quarters ending in March, June, and September and within 90 days of the calendar year-end. Registered CTAs must file Form CTA-PR on a quarterly basis within 45 days of each quarter-end.

Advisers that are dually registered with the SEC and CFTC may satisfy certain Form CPO-PQR filing requirements when they file Form PF. In order to take advantage of this, the adviser must file Form PF by its Form CPO-PQR deadline.

CPO and CTA Annual Updates. Registered CPOs must distribute an Annual Report to each participant in each pool that it operates, as well as submit a copy of the Annual Report and key financial balances from it to the National Futures Association (“NFA”), within 90 days of the pool’s fiscal year-end. An independent certified public accountant must certify the Annual Report.

Additionally, CPOs and CTAs must prepare and file with the NFA an Annual Questionnaire and Annual Registration Update and pay their NFA membership dues and fees.

Additional Regulatory and Compliance Matters

Verification of New Issues Status.  Fund managers need to conduct an annual verification of each account to ensure investors are eligible to participate in initial public offerings or new issues pursuant to FINRA Rules 5130 and 5131. While the initial verification requires affirmative representations by account holders, FINRA allows subsequent verifications to be completed through the use of negative consent letters.

Annual Privacy Policy Notice.  Each registered investment adviser must provide it investors with a copy of its privacy policy on an annual basis, even if no changes have been made to the privacy policy.

Form D Annual Amendments.  Form D filings for funds maintaining continuous offerings must be amended annually, on or before the anniversary of the Form D filing or the filing of the most recent amendment.  When amending Form D, the fund must update the entire form.

Blue Sky Filings.  Fund managers should review their state blue sky filings to ensure they have met any renewal requirements.

SEC Increase to Qualified Client Threshold Reminder.  On June 14, 2016, the SEC issued an order increasing the dollar amount of the net worth threshold in Rule 205-3 under the Investment Advisers Act of 1940 from $2,000,000 to $2,100,000. Rule 205-3 provides an exemption from the prohibition on performance-based compensation where the client entering into the advisory contract is a “qualified client’ as defined in the rule. As a result, SEC registered investment advisers and certain state registered and exempt advisers subject to the qualified client requirement will need to consult with counsel and update their advisory agreements and fund offering documents prior to the effective date.