Upcoming Deadlines: Investment Advisers’ Year-End and Q1 2022 Compliance Reminders

At the end of every fiscal year,[1] U.S. registered investment advisers (“RIAs”) have regulatory compliance tasks and obligations, which range from performing an annual review of the RIA’s compliance function to submitting annual update filings to the U.S. Securities and Exchange Commission (“SEC”) or state regulators. In some years – including 2022 – there are important industry developments that require advance planning based on changes to laws affecting RIAs. While not an exhaustive list, what follows is an overview of year-end steps that RIAs should consider as we approach the end of 2021.

• Annual Registration Fees.  Every year, FINRA’s IARD system facilitates the annual registration renewal process for RIA firms and their investment professionals (“IARs”). Preliminary renewal statements are available on the E-Bill System in mid-November and show the renewal fees and annual system processing fees due. This year, full payment should be submitted in IARD by no later than December 13, 2021. The last day that the IARD system will accept form filings or renewal payments prior to year-end is December 26, 2021. Firms that fail to satisfy renewal fees payments on time can face penalties, including the loss of their adviser registration status.
• Form ADV and Form CRS.  RIAs must file updates to their Form ADV disclosure documents annually following the close of their fiscal year.[2] Firms must file annual ADV updates within 90 days (for firms with a December 31 fiscal year end, the deadline for ADV submission is March 31, 2022) and deliver the new brochure to clients within 120 days of fiscal year end (April 30, 2022). Each of the following must be updated accordingly:[3]
  • Form ADV Part 1.  Information about the firm is communicated via the ADV Part 1, such as its identifying details and representations regarding its registration status.
  • Form ADV Part 2A.  The ADV Part 2A is provided to each new client before signing an investment advisory agreement and contains the information potential clients might need to select a firm as their investment adviser.
  • Form ADV Part 2B.  Firms that have supervised persons providing advisory services to clients may need to update ADV Part 2B if details change.
  • Form CRS.  Also known as the ADV Part 3, this document provides a summary of an RIA’s business, including information regarding services, conflicts of interest, fees, and costs. Form CRS is required of SEC-registered RIAS (and broker-dealers) that provide services to retail investors.

  If you need consultation regarding your upcoming regulatory and filing deadlines, or how the new Marketing Rule may apply to your firm, we are ready to help.
  Shustak Reynolds and Partners regularly advises investment advisory and broker-dealer firms on the impact of applicable state and federal rules.

  [1] Most RIAs use a 12/31 fiscal year end.  This article is written with that date in mind and applies generally to other fiscal year end dates as well.

  [2] Generally, only material updates or changes to disciplinary disclosures require an “other than annual” update filing.

  [3] https://www.sec.gov/about/forms/formadv-instructions.pdf.  Note also that the SEC announced forthcoming updates to Form ADV in connection with the new Marketing Rule (discussed below) which will include new sections of ADV for RIAs to complete.

  [4] https://www.sec.gov/divisions/investment/iard/iardfaq.shtml

  [5] https://www.sec.gov/investment/investment-adviser-marketing

  [6] https://www.sec.gov/pdf/form13f.pdf; see also 17 CFR §§ 240.13h-1, 240.13d-101, and 240.13d-102

  [7] https://www.sec.gov/files/formpf.pdf

  [8] We wrote on the qualified client topic previously: https://www.shufirm.com/change-to-definition-of-qualified-client-is-effective; see also 17 CFR § 275.206(4)-7