New Part 2 – Frequently Asked Questions

• When do I have to submit the new Part 2?
• Can I submit the new Part 2 before October 12, 2010?
• By what date must an investment adviser have their new Part 2 online?
• I am a sole proprietor and filing the Form ADV myself, will I be able to complete the new Part 2 without the help of a consulting firm or an attorney?
• Does the Department of Financial Protection and Innovation make referrals to any consulting firms?
• I cannot locate the instructions for Part 2A & 2B on the SEC’s website.  Are the instructions on Department of Financial Protection and Innovation website?
• I understand that there is no longer a standard Form ADV Part II and I must create my firm’s own brochure. 
• Does the Department provide a sample brochure that I can compare my brochure to it?
• Is there any guidance on how to create my firm’s brochure?
• The email I received from the Department of Financial Protection and Innovation talks about the distribution and delivery schedule of the new Part 2.  What is this?
• How do I file the new Part 2?
• What is the difference between the old Part II and the new Part 2?

When do I have to submit the new Part 2?

The effective date is October 12, 2010.  Investment advisers may begin filing the new Part 2 at that time.

Can I submit the new Part 2 before October 12, 2010?

No, the Department is not implementing the change until October 12, 2010.

By what date must an investment adviser have their new Part 2 online?

• As of January 1, 2011, all new investment advisers applicants will have to file the new Part 2 as part of their application.
• As of January 1, 2011, all licensed investment advisers will need to file the new Part 2 with their next filing of an amendment to Form ADV or their annual updating amendment.
• Between October 12, 2010 and January 1, 2011, new applicants and currently licensed advisers may file either the current Part II or the new Part 2.

I am a sole proprietor and filing the Form ADV myself, will I be able to complete the new Part 2 without the help of a consulting firm or an attorney?

It is possible for any investment adviser to file the Form ADV (Parts 1 & 2) themselves.  However, the applicant should read over the instructions to Part 2 to identify if they need the assistance of a consulting firm or an attorney.

Does the Department of Financial Protection and Innovation make referrals to any consulting firms?

No the Department does not make any referrals to any particular consulting firms or attorneys.  The applicant will need to research this on their own.

I cannot locate the instructions for Part 2A & 2B on the SEC’s website.  Are the instructions on Department of Financial Protection and Innovation website?

We are in the process of putting the instructions to the new Part 2 to the Department website.  Please review the site for further development.

The general instructions for Part 2 are on pages 132-150 of the SEC Final Rule (http://www.sec.gov/rules/final/2010/ia-3060.pdf.)  The specific instructions for Part 2A Firm Brochure, Part 2A Appendix 1 Wrap Fee Program Brochure and Part 2B Brochure Supplement are on page 151-174. 

I understand that there is no longer a standard Form ADV Part II and I must create my firm’s own brochure.  Does the Department provide a sample brochure that I can compare my brochure to it?

No the Department does not have a sample brochure.  The Part 2 instructions are very specific and the format of the brochure should be followed accordingly.

Is there any guidance on how to create my firm’s brochure?

You may visit the North American Securities Administrators Association (NASAA’s) website at www.nasaa.org for a blank template of the new Form ADV Part 2.  This form is a blank document that contains the Brochure Item numbers and heading names.

The email I received from the Department of Financial Protection and Innovation talks about the distribution and delivery schedule of the new Part 2.  What is this?

This requirement is on page 126 of the SEC rule.  It states that the investment adviser firm must deliver a brochure and one or more brochure supplements to each client or prospective client containing all information required by Part 2 of the form ADV before or at the time the adviser enters into an investment advisory contract with that client.

On January 13, 2011 the Department issued a letter for extension of the compliance date for the brochure supplement. [See full text of letter]

How do I file the new Part 2?

The investment adviser will file the new Part 2 in the same manner as it files it now.  The new brochure will need to be uploaded to the IARD system.  If you are experiencing problems uploading the brochure, please contact the IARD HelpLine at (240) 386-4848.

What is the difference between the old Part II and the new Part 2?

The old Part II contains check boxes that allow you to select your answer choices.  The new Part 2 is a narrative form and there are no boxes to check.  It provides the applicant the opportunity to describe their business operations in greater detail and clarity.