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.
    
    
• State Filings.  RIAs (as well as Exempt Reporting Advisers) may need to make state notice filings following the end of their fiscal year. Some triggers for state notice filings include, among other things, opening an office in a new state, or crossing a threshold number of clients in a new state. Notice filings are part of, and are therefore due with, Form ADV Part 1A. Fees for state filings are paid from an adviser’s IARD account.[4]
  
  
• Amend Compliance Policies for New Marketing Rule.  The rules governing how RIAs can market their services to potential and existing clients will change fundamentally in 2022. New rules approved by the SEC will overhaul and modify existing advertising processes, and allow for the limited use of endorsements, client testimonials, and third-party rating systems (among other changes). Each SEC RIA (and state RIAs in states that adopt the changed rules) will need to amend its marketing processes and revise those policies and procedures that govern marketing activities. RIAs should allow plenty of time to develop these new policies and procedures. To learn more about the new marketing  rule, see our previous article on the topic.[5]
  
  
• Amendments to Form D and Blue-Sky Filings.  Advisers to private funds should consider whether they need to file or amend their Form D filing which relates to exempt offerings of securities. Blue-Sky filings give similar notice to individual states. At least annually, advisers should review the information in their Form D and Blue-Sky filings to determine whether any new or amended filings are necessary.  Certain Blue-Sky filings expire on a periodic basis in some states and must be renewed.
  
  
• Regulatory Filings – 13F, 13H, 13D, 13G.  Annual updates to Form 13F for institutional managers, Form 13H for large traders, and any amendments to Form 13D and Form 13G are due within 45 days of the end of the calendar year. Any quarterly updates to Form 13H should be filed “promptly.[6]
  
  
• Form PF for Advisers to Private Funds.  Advisers to larger private funds will need to file Form PF.  Whether a quarterly or annual filing is required will depend on certain characteristics of the adviser and the private funds it manages.  Generally, quarterly filings are due within 60 days after each quarter ends (March 1, 2022) while annual filers have 120 days after the fiscal year end (April 30, 2022).[7]
  
  
• Compliance Review.  Rule 206(4)-7 of the Investment Advisers Act of 1940, as amended, requires an annual review of each Firm’s compliance policies and procedures. The appropriate internal stakeholders should ensure a timely review and determine whether there are compliance issues to be addressed for the upcoming year.  Areas to consider include, among others, new conflicts of interest, updates to investment or internal processes, or adjustments to the Firm’s business plan, business continuity, cybersecurity, and marketing (esp. performance advertising). For example, this year a compliance review might discover that the definitions for accredited investor and qualified client have changed, and therefore updates to subscription documents will be needed to reflect those changes.[8]
  
  

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.