Which Records Must Be Retained In A State-registered Investment Adviser's Principal Office?

Information for Newly-Registered Investment Advisers

November 23, 2010 [Update Currently in Progress]

Prepared past the Staff of the Securities and Commutation Commission's Sectionalization of Investment Direction and Office of Compliance Inspections and Examinations¹

This information sheet contains general information well-nigh certain provisions of the Investment Advisers Act of 1940 (also called the "Advisers Act") and selected rules under the Advisers Act. It is intended to aid newly-registered investment directorate in agreement their compliance obligations with respect to these provisions. This data canvas as well provides data near the resource bachelor to investment advisers from the SEC to assistance advisers empathize and comply with these laws and rules.

As an adviser registered with the SEC, you have an obligation to comply with all of the applicable provisions of the Advisers Human action and the rules that accept been adopted by the SEC. This information sail does not provide a complete description of all of the obligations of SEC-registered advisers under the law. To access the Advisers Act and rules and other information, visit the SEC's website at world wide web.sec.gov (the Advisers Human activity and rules are available at http://www.sec.gov/divisions/investment.shtml).²

Investment Advisers Are Fiduciaries

As an investment adviser, you are a "fiduciary" to your advisory clients. This means that you have a primal obligation to human action in the best interests of your clients and to provide investment advice in your clients' best interests. You lot owe your clients a duty of undivided loyalty and utmost skilful faith. You should not appoint in whatsoever activity in conflict with the interest of any customer, and y'all should take steps reasonably necessary to fulfill your obligations. You must utilize reasonable care to avoid misleading clients and you lot must provide total and fair disclosure of all cloth facts to your clients and prospective clients. Generally, facts are "material" if a reasonable investor would consider them to be important. You must eliminate, or at least disclose, all conflicts of interest that might incline yous — consciously or unconsciously — to render advice that is not disinterested. If you do not avert a conflict of interest that could touch on the impartiality of your communication, you must make full and frank disclosure of the conflict. You cannot apply your clients' assets for your own benefit or the do good of other clients, at least without client consent. Departure from this fiduciary standard may found "fraud" upon your clients (under Section 206 of the Advisers Human activity).

Investment Advisers Must Have Compliance Programs

Every bit a registered investment adviser, you are required to adopt and implement written policies and procedures that are reasonably designed to prevent violations of the Directorate Human activity. The Commission has said that information technology expects that these policies and procedures would exist designed to prevent, detect, and correct violations of the Directorate Act. You must review those policies and procedures at least annually for their adequacy and the effectiveness of their implementation, and designate a main compliance officer ("CCO") to be responsible for administering your policies and procedures (under the "Compliance Rule" — Rule 206(4)-seven).

Nosotros note that your policies and procedures are not required to contain specific elements. Rather, y'all should analyze your individual operations and identify conflicts and other compliance factors that create risks for your firm and then design policies and procedures that address those risks. The Commission has stated that information technology expects your policies and procedures, at a minimum, to address the following issues to the extent that they are relevant to your business:

Portfolio direction processes, including allocation of investment opportunities among clients and consistency of portfolios with clients' investment objectives, your disclosures to clients, and applicative regulatory restrictions;
The accurateness of disclosures fabricated to investors, clients, and regulators, including account statements and advertisements;
Proprietary trading by you and the personal trading activities of your supervised persons;
Safeguarding of client assets from conversion or inappropriate use by your personnel;
The authentic cosmos of required records and their maintenance in a manner that secures them from unauthorized alteration or use and protects them from untimely destruction;
Safeguards for the privacy protection of client records and information;
Trading practices, including procedures past which yous satisfy your all-time execution obligation, employ client brokerage to obtain research and other services (referred to as "soft dollar arrangements"), and allocate aggregated trades amongst clients;
Marketing advisory services, including the use of solicitors;
Processes to value client holdings and assess fees based on those valuations; and
Business continuity plans.

Investment Advisers Are Required to Prepare Certain Reports and to File Certain Reports with the SEC

Every bit a registered investment adviser, you are required to file an annual update of Part 1A of your registration form (Class ADV) through the Investment Advisers Registration Depository (IARD). You lot must file an annual updating amendment to your Course ADV within 90 days later on the stop of your fiscal year. In addition to making almanac filings, yous must promptly file an amendment to your Form ADV whenever sure information contained in your Class ADV becomes inaccurate (the Grade ADV filing requirements are contained in Rule 204-1 of the Advisers Act, and in the instructions to the Form).

Brand sure your Form ADV is complete and current. Inaccurate, misleading, or omitted Form ADV disclosure is the almost frequently cited finding from our examinations of investment advisers.
Please keep the electronic mail accost of your contact person current (Form ADV, Part 1A, Item 1J). Nosotros use this e-mail accost to continue you apprised of of import developments (including when information technology's fourth dimension to file an amendment to your Form ADV).
Accurately written report the amount of assets that y'all take under management (Form ADV, Part 1A, Item 5F(2)). Advisers who accept less than $25 million of avails nether management, who are not otherwise eligible to maintain their registration with the SEC, or who stop doing business as an investment adviser, should file a Form ADV-W through IARD to withdraw their registration.

With respect to Part 2A of your Class ADV, you are required to file information technology electronically through IARD. As with Part 1A, you lot must update Part two annually within xc days of the terminate of your financial yr and whenever it becomes materially inaccurate. Part 2B brochure supplements, are not required to be uploaded to IARD.

You may also be subject to other reporting obligations. For instance, an adviser that exercises investment discretion (or that shares investment discretion with others) over sure equity securities (including convertible debt and options), which have a fair market value in the amass of $100 1000000 or more, must file a Form 13F each quarter that discloses these holdings. "Discretionary authority" means that y'all take the dominance to make up one's mind which securities to purchase, sell, and/or retain for your clients.

You should also be aware that it is unlawful to make whatever untrue statement or omit any material facts in an application or a study filed with the SEC (under Department 207 of the Advisers Deed), including in Form ADV and Form ADV-Due west.

Investment Advisers Must Provide Clients and Prospective Clients with a Written Disclosure Statement

Registered investment directorate are required to provide their informational clients and prospective clients with a written disclosure document (these requirements, and a few exceptions, are set forth in Dominion 204-three under the Advisers Act). As a registered adviser, you comply with this requirement past providing informational clients and prospective clients with Part 2 of your Form ADV. This written disclosure document should be delivered to your prospective clients before or at the time of entering into an informational contract (under certain conditions, y'all may comply with the delivery requirements through electronic media).

Each year, you also need to deliver Role 2 or summary of material changes to each client, without charge. You are required to maintain a copy of each disclosure document and each amendment or revision to information technology that was given or sent to clients or prospective clients, forth with a record reflecting the dates on which such disclosure was given or offered to be given to whatsoever customer or prospective client who subsequently became a client (under Rule 204-2(a)(14)).

Investment Directorate Must Have a Code of Ethics Governing Their Employees and Enforce Sure Insider Trading Procedures

As a registered investment adviser, you are required to prefer a code of ethics (nether the "Code of Ethics Rule" — Rule 204A-1 under the Advisers Human activity). Your lawmaking of ethics should gear up forth the standards of business conduct expected of your "supervised persons" (i.e., your employees, officers, directors and other people that you are required to supervise), and it must accost personal securities trading past these people.

Nosotros note that you are not required to prefer a particular standard of business organisation ethics. Rather, the standard that you choose should reflect your fiduciary obligations to your advisory clients and the fiduciary obligations of the people y'all supervise, and require compliance with the federal securities laws. In adopting a lawmaking of ethics, investment advisers may set higher ethical standards than the requirements under the police.

In order to forestall unlawful trading and promote upstanding acquit past advisory employees, advisers' codes of ideals should include certain provisions relating to personal securities trading by advisory personnel. Your code of ideals must include the following requirements:

Your "access persons" must report their personal securities transactions to your CCO or to another designated person each quarter. "Access persons" are whatsoever of your supervised persons who have access to non-public data regarding client transactions or holdings, make securities recommendations to clients or accept access to such recommendations, and, for near advisers, all officers, directors and partners.
Your access persons must submit a complete report of the securities that they hold at the fourth dimension they kickoff get an access person, and then at to the lowest degree once each year after that.ⁱⁱⁱ Your code of ethics must also crave that your access persons obtain your approval prior to investing in initial public offerings or private placements or other limited offerings, including pooled investment vehicles (except if your firm has only i access person).
Your CCO or another person you designate in addition to your CCO must review these personal securities transaction reports.
Your supervised persons must promptly study violations of your code of ethics (i.e., including the federal securities laws) to the CCO or to some other person you designate (provided your CCO besides receives a study on such issues). You must also maintain a record of these breaches.

As well, as a registered investment adviser, you lot are required to establish, maintain, and enforce written policies and procedures that are reasonably designed to prevent the misuse of material not-public information (under Section 204A of the Advisers Human activity). These policies and procedures must embrace your activities and those of your supervised persons. Advisers often include this prohibition on insider trading in their code of ideals.

Provide each of the people that you supervise with a copy of your code of ideals (and any amendments that y'all subsequently make to it), and also obtain a written acknowledgement from the supervised person that he/she has received information technology. In addition, yous must describe your code of ideals in your Course ADV, Part two, Item 11 and provide a re-create to your informational clients, if they request it.

Investment Directorate are Required to Maintain Certain Books and Records

As a registered adviser, you must make and keep true, accurate and electric current sure books and records relating to your investment advisory business (nether "the Books and Records Dominion" — Dominion 204-ii). The books and records that you lot must make and go on are quite specific, and are described below in office:

Informational concern fiscal and accounting records, including: cash receipts and disbursements journals; income and expense account ledgers; checkbooks; banking concern account statements; advisory concern bills; and financial statements.
Records that pertain to providing investment advice and transactions in client accounts with respect to such advice, including: orders to merchandise in customer accounts (referred to as "order memoranda"); trade confirmation statements received from broker-dealers; documentation of proxy vote decisions; written requests for withdrawals or documentation of deposits received from clients; and written correspondence yous sent to or received from clients or potential clients discussing your recommendations or suggestions.
Records that document your authority to conduct business organization in client accounts, including: a list of accounts in which you have discretionary authority; documentation granting you lot discretionary authority; and written agreements with clients, such every bit informational contracts.
Advertising and operation records, including: newsletters; articles; and computational worksheets demonstrating performance returns.
Records related to the Code of Ethics Dominion, including those addressing personal securities transaction reporting by access persons.
Records regarding the maintenance and commitment of your written disclosure document and disclosure documents provided by certain solicitors who seek clients on your behalf.
Policies and procedures adopted and implemented under the Compliance Rule, including whatever documentation prepared in the class of your annual review.

Some directorate are required to maintain additional records. For example, advisers that take custody and possession of clients' funds and/or securities must make and go along additional records that are described in the Books and Records Rule (Rule 204-2, paragraph (b)), and advisers who provide investment supervisory or management services to whatever client must also make and keep specific additional records (which are described in Rule 204-ii, paragraph (c)).

You must go along these records for specified periods of fourth dimension. Generally, most books and records must be kept for five years from the last day of the fiscal yr in which the last entry was made on the certificate or the document was disseminated. You may be required to continue sure records for longer periods, such equally records that support operation calculations used in advertisements (equally described in Dominion 204-2, paragraph (e)).

You are required to go along your records in an hands accessible location. In addition, for the starting time two of these years, you must continue your records in your office(s). If you lot maintain some of your original books and records somewhere other than your main function and place of business organization, yous must annotation this do and place the alternative location on your Form ADV (in Section 1K of Schedule D). Many advisers store duplicate copies of their advisory records in a location separate from their principal function in order to ensure the continuity of their business in the case of a disaster.

You may store your original books and records past using either micrographic media or electronic media. These media more often than not include microfilm or digital formats (east.g., electronic text, digital images, proprietary and off-the-shelf software, and e-mail). If yous use email or instant messaging to make and proceed the records that are required under the Directorate Act, you should keep the email, including all attachments that are required records, as examiners may request a copy of the complete record. In dealing with electronic records, you lot must also have precautions to ensure that they are secure from unauthorized access and theft or unintended destruction (similar safeguarding provisions regarding client information obtained by you is required by Regulation South-P under the Gramm-Leach-Bliley Human action). In general, you should be able to promptly (generally within 24 hours) produce required electronic records that may be requested past the SEC staff, including email. In gild to do so, the Advisers Act requires that y'all arrange and index required electronic records in a style that permits easy location, access, and retrieval of any particular electronic record.

Investment Advisers Must Seek to Obtain the Best Price and Execution for Their Clients' Securities Transactions

Equally a fiduciary, you are required to human activity in the best interests of your advisory clients, and to seek to obtain the best toll and execution for their securities transactions. The term "best execution" means seeking the best price for a security in the marketplace as well as ensuring that, in executing client transactions, clients do not incur unnecessary brokerage costs and charges. You are not obligated to go the lowest possible commission price, simply rather, yous should determine whether the transaction represents the all-time qualitative execution for your clients. In addition, whenever trading may create a conflicting interest between you and your clients, you have an obligation, before engaging in the activity, to obtain the informed consent from your clients after providing full and fair disclosure of all material facts. The Commission has described the requirement for advisers to seek best execution in various situations.

In selecting a broker-dealer, you should consider the total range and quality of the services offered by the broker-dealer, including the value of the inquiry provided, the execution capability, the commission rate charged, the broker-dealer's fiscal responsibility, and its responsiveness to you. To seek to ensure that you are obtaining the best execution for your clients' securities trades, y'all must periodically evaluate the execution performance of the broker-dealers you employ to execute clients' transactions.

You may determine that information technology is reasonable for your clients to pay committee rates that are higher than the lowest committee rate bachelor in social club to obtain certain products or services from a broker-dealer (i.e., soft dollar organization). To qualify for a "prophylactic harbor" from possible charges that yous have breached your fiduciary duty by causing your clients to pay more than the lowest commission rate, you must use clients' brokerage commissions to pay for certain defined "brokerage or research" products and services, utilise such products and services in making investment decisions, make a skillful faith determination that the commissions that clients volition pay are reasonable in relation to the value of the products and services received, and disembalm these arrangements.

The SEC staff has stated that, in directing orders for the purchase or sale of securities, you may amass or "bunch" orders on behalf of two or more customer accounts, so long as the bunching is done for the purpose of achieving best execution, and no client is systematically advantaged or disadvantaged by the bunching. The SEC staff has also said that, if y'all make up one's mind not to aggregate orders for customer accounts, you should disembalm to your clients that you will not amass and the potential consequences of not aggregating orders.

If your clients impose limitations on how you will execute securities transactions on their behalf, such as by directing you lot to exclusively use a specific banker-dealer to execute their securities transactions, you take an obligation to fully disclose the effects of these limitations to the client. For example, if you negotiate volume commission discounts on bunched orders, a client that has directed yous to use a specific broker should be informed that he/she will forego any benefit from savings on execution costs that you might obtain for your other clients through this practice.

You lot should as well seek to obtain the best toll and execution when you lot enter into transactions for clients on a "principal" or "agency cross" ground. If you have acted every bit a principal for your own account by ownership securities from, or selling securities to, a client, you must disembalm the arrangement and the conflicts of interest in this practice (in writing) and likewise obtain the customer's consent for each transaction prior to the time that the trade settles. There are also explicit atmospheric condition under which you lot may cantankerous your advisory clients' transactions in securities with securities transactions of others on an bureau basis (under Rule 206(3)-2). For example, you must obtain advance written authorization from the client to execute such transactions, and also provide clients with specific written disclosures. Compliance with Rule 206(3)-two is generally not required for transactions internally crossed or effected between two or more clients yous advise and for which you receive no additional compensation (i.e., commissions or transaction-based compensation); however, full disclosure regarding this practice should be made to your clients.

Requirements for Investment Advisers' Contracts with Clients

Every bit a registered investment adviser, your contracts with your informational clients must include some specific provisions (which are ready along in Section 205 of the Advisers Act). Your informational contracts (whether oral or written) must convey that the advisory services that yous provide to the client may non be assigned by y'all to any other person without the prior consent of the client. With limited exceptions, contracts cannot include provisions providing for your compensation to be based on the functioning of the client's business relationship. In improver, the SEC staff has stated that an adviser should non enter into contracts with clients, except with certain sophisticated clients, that contain terms or clauses unremarkably referred to as a "hedge clause" considering such clauses or provisions are likely to lead other clients to believe that they accept waived their rights of legal action, whether under the federal securities laws or common law.

Investment Advisers May be Examined by the SEC Staff

As a registered investment adviser, your books and records are subject field to compliance examinations by the SEC staff (under Section 204 of the Advisers Act). The purpose of SEC examinations is to protect investors by determining whether registered firms are complying with the law, adhering to the disclosures that they accept provided to their clients, and maintaining appropriate compliance programs to ensure compliance with the law. If you are examined, you lot are required to provide examiners with admission to all requested advisory records that yous maintain (under certain weather condition, documents may remain private under the attorney-customer privilege).

More information about examinations by the SEC and the examination procedure is provided in the brochure, "Examination Information for Broker-Dealers, Transfer Agents, Immigration Agencies, Investment Advisers and Investment Companies," which is bachelor on the SEC's website at http://world wide web.sec.gov/nigh/offices/ocie/ocie_exambrochure.pdf.

Requirements for Investment Advisers that Vote Proxies of Clients' Securities

As a registered investment adviser, if y'all have voting potency over proxies for clients' securities, you must adopt policies and procedures reasonably designed to ensure that you: vote proxies in the best interests of clients; disclose information to clients about those policies and procedures; and depict to clients how they may obtain data most how y'all accept voted their proxies (these requirements are in Rule 206(4)-6 nether the Advisers Act).

If yous vote proxies on behalf of your clients, you lot must also retain certain records. Yous must keep: your proxy voting policies and procedures; the proxy statements yous received regarding your client'southward securities (the Rule provides some alternative arrangements); records of the votes you cast on behalf of your clients; records of client requests for proxy voting information; and whatever documents that you prepared that were textile to making a decision equally to how to vote or that memorialized the ground for your decision (these requirements are described in Advisers Human action Rule 204-ii(c)(2)).

Requirements for Investment Advisers that Annunciate their Services

To protect investors, the SEC prohibits certain types of advert practices by advisers. An "advertisement" includes any advice addressed to more than one person that offers whatever investment advisory service with regard to securities (under "the Advertising Rule" — Rule 206(4)-one). An advertisement could include both a written publication (such equally a website, newsletter or marketing brochure) as well equally oral communications (such as an declaration made on radio or television).

Advertising must non be faux or misleading and must not contain any untrue statement of a material fact. Advertising, like all statements made to advisory clients and prospective clients, is subject to the general prohibition on fraud (Section 206 likewise as other anti-fraud provisions under the federal securities laws). Specifically prohibited are: testimonials; the use of by specific recommendations that were assisting, unless the adviser includes a listing of all recommendations made during the by year; a representation that whatsoever graph, nautical chart, or formula can in and of itself exist used to determine which securities to buy or sell; and advertisements stating that any report, analysis, or service is costless, unless it really is gratuitous.

The SEC staff has said that, if yous advertise your past investment performance record, y'all should disembalm all material facts necessary to avoid any unwarranted inference. For instance, SEC staff has indicated that information technology may view performance information to be misleading if information technology:

does not disclose prominently that the results portrayed relate simply to a select grouping of the adviser's clients, the footing on which the selection was made, and the effect of this exercise on the results portrayed, if material;
does not disclose the event of material market or economic conditions on the results portrayed (east.g., an advertizing stating that the accounts of the adviser's clients appreciated in value 25% without disclosing that the market mostly appreciated 40% during the same period);
does non reflect the deduction of advisory fees, brokerage or other commissions, and any other expenses that accounts would have or really paid;
does not disclose whether and to what extent the results portrayed reverberate the reinvestment of dividends and other earnings;
suggests or makes claims about the potential for profit without also disclosing the possibility of loss;
compares model or actual results to an index without disclosing all material facts relevant to the comparing (e.g., an advertisement that compares model results to an index without disclosing that the volatility of the index is materially unlike from that of the model portfolio); and
does not disembalm any material conditions, objectives, or investment strategies used to obtain the results portrayed (e.yard., the model portfolio contains disinterestedness stocks that are managed with a view towards capital appreciation).

In addition, equally a registered adviser, you may not imply that the SEC or another agency has sponsored, recommended or approved you, based upon your registration (nether Section 208 of the Advisers Act). You should non utilise the term "registered investment adviser" unless you lot are registered, and you should non use this term to imply that as a registered adviser, you take a level of professional competence, education or special training. For example, the SEC staff has stated that advisers should not utilise the term "RIA" later a person's name considering using initials after a proper noun usually indicates a caste or a licensed professional position for which there are certain qualifications; however, there are no federal qualifications for becoming an SEC-registered adviser.

Requirements for Investment Advisers that Pay Others to Solicit New Clients

Registered investment advisers may pay greenbacks compensation to others to seek out new clients on their behalf, commonly called "solicitors" or "finders," if they see certain conditions (under Rule 206(four)-3 of the Advisers Human action):

The solicitor is not subject to certain disciplinary actions.
The fee is paid pursuant to a written understanding to which you are a party and (with express exceptions) the agreement must: depict the solicitor's activities and bounty system; require that the solicitor perform the duties y'all assign and in compliance with the Advisers Human activity; require the solicitor to provide clients with a electric current re-create of your disclosure certificate; and, if seeking clients for personalized informational services, require the solicitor to provide clients with a separate written disclosure certificate containing specific information.
You receive from the solicited client, prior to or at the time you enter into an understanding, a signed and dated detect confirming that he/she was provided with your disclosure document and, if required, the solicitor's disclosure document.
You have a reasonable basis for believing that the solicitor has complied with the terms of your understanding.

Requirements for Investment Advisers that have Custody or Possession of Clients' Funds or Securities

Registered investment advisers that have "custody" or "possession" of client assets must have specific measures to protect client assets from loss or theft (under "the Custody Rule" — Rule 206(4)-2 under the Advisers Act).

The first pace is to decide whether y'all have custody or possession of client avails. "Custody" is defined as "holding, directly or indirectly, client funds or securities, or having any authority to obtain possession of them." This includes situations in which you lot:

have physical possession of client funds or securities, even temporarily;
enter into arrangements (including a full general power of attorney) authorizing you to withdraw funds or securities from the client's account (note that if you are authorized to deduct your advisory fees or other expenses directly from clients' accounts, you have custody); and
serve in a capacity that gives you or a supervised person legal ownership or access to customer funds or securities (annotation that if yous are a general partner to a privately-offered pooled investment vehicle, you lot have custody).
If y'all are a trustee, yous may accept custody.

If you lot have custody, with limited exceptions, you must maintain these client funds and securities at a "qualified custodian." Generally, qualified custodians include most banks and insured savings associations, SEC-registered banker-dealers, Commodity Substitution Act-registered futures committee merchants, and certain strange financial institutions. With a limited exception, for client accounts over which you take custody, you must have a reasonable basis, after due inquiry, for believing that the client (or a designated representative) receives periodic reports directly from the custodian that contain specific data with respect to the funds and securities in custody. With respect to pooled investment vehicles over which y'all have custody, the qualified custodian must transport account statements for the pooled vehicle direct to each investor.

If yous take custody of client funds or securities that are held at an unrelated, independent qualified custodian, then you must accept a "surprise verification" past an contained public auditor. The contained public accountant must verify the funds and securities in your custody or possession at to the lowest degree once each agenda twelvemonth, and must then promptly file a "document of accounting" with Grade ADV-E electronically through IARD.⁴

If you have custody of client funds or securities that you or a related person maintains as a qualified custodian, and so you lot must also have an internal control report completed past an independent public accountant registered with, and subject area to regular inspection past, the Public Company Accounting Oversight Board.

Staff answers to frequently asked questions regarding the custody rule may be establish at http://www.sec.gov/divisions/investment/custody_faq_030510.htm.

Requirements for Investment Advisers to Disembalm Sure Financial and Disciplinary Information

Registered investment advisers may exist required to disembalm sure financial and disciplinary information (nether Rule 206(4)-4 under the Advisers Act). These requirements are described below.

Registered advisers that have custody or discretionary authorization over client funds or securities, or that require prepayment half dozen months or more in accelerate of more than $ane,200 in advisory fees, must promptly disclose to clients and any prospective clients whatever financial atmospheric condition that are reasonably likely to impair their power to run into their contractual commitments to their clients.

All registered advisers must also promptly disclose any legal or disciplinary events that would exist material to a client's or a prospective client'southward evaluation of the adviser's integrity or its ability to come across its commitments to clients (regardless of whether the adviser has custody or requires prepayment of fees). The types of legal and disciplinary events that may exist textile include:

Criminal or civil deportment, where the adviser or a management person of the adviser was convicted, pleaded guilty or "no contest," or was subject to certain disciplinary actions with respect to conduct involving investment-related businesses, statutes, regulations, or activities; fraud, false statements, or omissions; wrongful taking of property; or blackmail, forgery, counterfeiting, or extortion.
Authoritative proceedings before the SEC, other federal regulatory agencies, or any state agency where the adviser's or a management person's activities were found to accept caused an investment-related business to lose its authorization to exercise business organisation or where such person was involved in a violation of an investment-related statute or regulation and was the subject area of specific disciplinary actions taken past the agency.
Self-regulatory system (SRO) proceedings in which the adviser or a management person was found to take acquired an investment-related business to lose its authorization to do business; or was establish to have been involved in a violation of the SRO'south rules and was the subject of specific disciplinary deportment taken by the arrangement.

Advisory Resources Available From the SEC

The SEC provides a great deal of helpful information near the compliance obligations of investment directorate on the SEC'southward website at https://www.sec.gov/investment. This information includes links to relevant laws and rules, staff guidance and studies, enforcement cases, and staff no-action and interpretive messages (by and large from 2001 — present). In add-on, the SEC'south website contains a listing of the source materials that were used in preparing this information sheet.

To assist chief compliance officers of investment advisers and investment companies in meeting their compliance responsibilities and to aid heighten compliance in the securities industry, the SEC has established the "CCOutreach Program." This program includes regional and national seminars on compliance issues of concern to CCOs. Information well-nigh CCOutreach and any scheduled events is available at http://edgarfeed.sec.gov/info/complianceoutreach.htm.

Finally, the SEC staff regularly receive calls and correspondence concerning the application of the federal securities laws, and directorate and other registrants are encouraged to communicate whatsoever questions or issues to SEC staff. To ensure that you reach the right person at the SEC, the SEC'southward website lists the names and contact data for SEC staff in the Division of Investment Management who are responsible for responding to communication from the public about specific topics (https://www.sec.gov/investment/contact/divisions-investment-imcontacthtm.html). With respect to bug or questions that arise in the context of a compliance examination by the SEC, advisers are encouraged to heighten whatsoever questions or issues directly with the SEC exam squad, or with examination supervisors in their local SEC part (contact information for senior exam staff is available at http://www.sec.gov/about/offices/ocie/ocie_org.htm).

Additional Information: Reference Materials

The following advisory sources may exist helpful.

Investment Directorate Are Fiduciaries

Department 206 of the Advisers Deed.
SEC v. Majuscule Gains Enquiry Agency, Inc., 375 U.S. 180 (1963), available on the SEC's website at http://world wide web.sec.gov/about/offices/ocie/iainfo/capitalgains1963.pdf.
In re Arleen Westward. Hughes, Release No. 34-4048 (February eighteen, 1948), bachelor on the SEC's website at http://www.sec.gov/litigation/opinions/2007/ia-4048.pdf.

Investment Advisers Must Have Compliance Programs

Rule 206(4)-7 under the Directorate Deed.
Compliance Programs of Investment Companies and Investment Directorate, Advisers Deed Release No. 2204 (December. 17, 2003), available on the SEC'south website at http://www.sec.gov/rules/concluding/ia-2204.htm.

Investment Directorate Are Required to Prepare Sure Reports and to File Sure Reports with the SEC

Form ADV (Role 1A and Role two), instructions to the Form, and filing requirements independent Rule 204-one under the Advisers Deed.
A list of the amendments that directorate must make to their Course ADV is in the General Instructions to Form ADV (Item iv) at http://world wide web.sec.gov/pdf/fadvpo.pdf.
SEC staff'due south responses to oft asked questions regarding completing and filing Form ADV are available on the SEC'due south website at http://www.sec.gov/divisions/investment/iard/iardfaq.shtml.
Additional information regarding Course 13F and an official listing of securities that fall nether Section 13(f) of the Securities Commutation Act are on the SEC's website at https://www.sec.gov/pdf/form13f.pdf.

Investment Advisers Must Provide Clients and Prospective Clients with a Written Disclosure Statement

Rule 204-3 under the Advisers Act.
Utilize Of Electronic Media Past Broker-Dealers, Transfer Agents, and Investment Advisers for Delivery of Data; Additional Examples Under The Securities Act Of 1933, Securities Exchange Act Of 1934, And Investment Company Act, Directorate Act Release No. 1562 (May 9, 1996), bachelor on the SEC's website at http://world wide web.sec.gov/rules/interp/33-7288.txt.

Investment Advisers Must Accept a Code of Ethics Governing Their Employees and Enforce Certain Insider Trading Procedures

Section 204A and Rule 204A-1 of the Advisers Act.
Investment Adviser Codes of Ideals, Directorate Act Release No. 2256 (July 2, 2004), bachelor on the SEC's website at http://www.sec.gov/rules/final/ia-2256.htm.
SEC staff no-action letter, Kleinwort Benson Investment Management Limited (pub. avail. December. 15, 1993), available on the SEC'south website at http://world wide web.sec.gov/divisions/investment/noaction/kleinwort121593.htm.
SEC staff no-action letter, Corinne Eastward. Wood (Herbert-Simon Co.) (pub. avail. April 17, 1986), available on the SEC's website at http://world wide web.sec.gov/divisions/investment/noaction/herbert-simon031886.htm.

Investment Advisers are Required to Maintain Sure Books and Records

Rule 204-2 nether the Directorate Human activity and Regulation S-P, privacy rules promulgated under Department 504 of the Gramm-Leach-Bliley Act.
Privacy of Consumer Financial Information (Regulation S-P), Advisers Act Release No. 1883 (June 22, 2000), which is available on the SEC's website at http://www.sec.gov/rules/final/34-42974.htm.
Electronic Recordkeeping by Investment Companies and Investment Advisers, Advisers Act Release No. 1945 (May 24, 2001), which is bachelor on the SEC�s website at http://www.sec.gov/rules/final/ic-24991.htm.

Investment Advisers Must Seek to Obtain the All-time Price and Execution for Their Clients' Securities Transactions

Section 206 of the Advisers Act.
Interpretive Release Apropos Telescopic of Department 28(e) of the Securities Substitution Act of 1934 and Related Matters, Exchange Act Release No. 23170 (April. 23, 1986), available on the SEC'south website at http://www.sec.gov/rules/interp/34-23170.pdf.
Interpretation of Section 206(3) of the Investment Advisers Act of 1940, Directorate Act Release No. 1732 (July 17, 1998), available on the SEC's website at http://www.sec.gov/rules/interp/ia-1732.htm.
Commission Guidance Regarding Client Commission Practices Under Section 28(eastward) of the Securities Exchange Act of 1934, Substitution Deed Release No. 54165 (July 18, 2006), bachelor on the SEC'south website at http://www.sec.gov/rules/interp/2006/34-54165.pdf.
In re Thompson and McKinnon, Exchange Act Release No. 8310 (May eight, 1968), available on the SEC'south website at http://www.sec.gov/litigation/opinions/34-8310.pdf.
In re Mark Bailey and Co., Directorate Human action Release No. 1105 (Feb. 24, 1988), available on the SEC's website at http://world wide web.sec.gov/litigation/admin/ia-1105.pdf.
In re Kingsley, Jennison, McNulty & Morse, Inc., Advisers Deed Release No. 1396 (Dec. 23, 1993), available on the SEC'southward website at http://www.sec.gov/litigation/opinions/ia-1396.pdf.
In re Marvin & Palmer Associates, Inc., Advisers Act Release No. 1841 (Sept. 30, 1999), bachelor on the SEC's website at http://www.sec.gov/litigation/admin/ia-1841.htm.
SEC staff no-action letter, United Missouri Bank of Kansas Metropolis, N.A. (pub. avail. May eleven, 1990), available on the SEC's website at http://www.sec.gov/investment/noaction/unitedmissouribank012395.htm.
SEC staff no-action alphabetic character, SMC Capital, Inc. (pub. avail. Sept. 5, 1995), available on the SEC's website at http://www.sec.gov/divisions/investment/noaction/smccapital090595.htm.
SEC staff no-action letter, Pretzel & Stouffer (Dec. i, 1995), available on the SEC's website at http://world wide web.sec.gov/divisions/investment/noaction/pretzelstouffer120195.htm.

Requirements for Investment Advisers' Contracts with Clients

Department 205 of the Advisers Act.
SEC staff no-action letter, Auchincloss & Lawrence, Inc. (pub. avail. Feb. 8, 1974) available on the SEC'south website at http://www.sec.gov/divisions/investment/noaction/auchincloss010874.htm.
SEC staff no-action letter, Heitman Uppercase Management LLC (pub. avail. Feb. 12, 2007), available on the SEC's website at http://www.sec.gov/divisions/investment/noaction/2007/heitman021207.pdf.

Investment Directorate May be Examined by the SEC Staff

Section 204 of the Directorate Human action.

Requirements for Investment Advisers that Vote Proxies of Clients' Securities

Rule 206(4)-6 and Rule 204-2(c)(2) under the Advisers Human activity.
Proxy Voting by Investment Advisers, Advisers Act Release No. 2106 (January. 31, 2003), bachelor on the SEC'south website at http://www.sec.gov/rules/final/ia-2106.htm.

Requirements for Investment Advisers that Advertise their Services

Section 206 and Rule 206(iv)-1 under the Advisers Act.
SEC staff no-action letter, Clover Capital Management, Inc. (pub. avail. Oct. 28, 1986), available on the SEC's website at http://www.sec.gov/divisions/investment/noaction/clovercapital102886.htm.
SEC staff no-action letter, Investment Company Institute, (pub. avail. Sept. 23, 1988), available on the SEC's website at http://www.sec.gov/divisions/investment/noaction/ici092388.htm.
SEC staff no-action letter, Mandell Financial Group. (pub. avail. May 21, 1997), bachelor on the SEC's website at http://www.sec.gov/divisions/investment/noaction/mandell052197.htm.

Requirements for Investment Directorate that Pay Others Greenbacks to Solicit New Clients

Dominion 206(4)-iii of the Advisers Human activity.

Requirements for Investment Directorate that take Custody or Possession of Clients' Funds or Securities

Rule 206(4)-ii under the Advisers Act.
Staff Responses to Questions about the Custody Rule at http://www.sec.gov/divisions/investment/custody_faq_030510.htm
Custody of Funds or Securities of Clients by Investment Advisers, Advisers Act Release No. 2986 (December. 30, 2009), available on the SEC's website at http://world wide web.sec.gov/rules/final/2009/ia-2968.pdf.
SEC staff no-action letter, Investment Adviser Clan, (pub. avail. Sept. xx, 2007), bachelor on the SEC�s website at http://www.sec.gov/divisions/investment/noaction/2007/iaa092007.pdf.

Requirements for Investment Directorate to Disembalm Certain Fiscal and Disciplinary Information

Rule 206(4)-four under the Advisers Act.

¹ The Securities and Commutation Commission, as a affair of policy, disclaims responsibility for any publication or statement by any of its employees. The views expressed herein are those of the staff and do not necessarily reflect the views of the Commission or the other staff members of the SEC.

² This information canvass contains descriptions of the Advisers Act, rules, Commission releases, court decisions, Committee orders and opinions, which impose or explain legal obligations. Information technology besides contains staff interpretations and no-action letters that have been issued by the Division of Investment Management. Staff interpretations and no-action letters provide breezy interpretative and advisory assist and correspond the views of persons who are continuously working with the provisions of the Directorate Human activity. Opinions expressed by the staff, however, are not an official expression of the Committee'southward views and they do not accept the force of police. You may wish to speak with an attorney or a compliance professional most specific provisions and how they utilize to your firm. This information is current equally of June 2007.

³ A consummate report contains: the championship and type of security; the substitution ticker symbol or CUSIP number; the number of shares, and chief amount of the security; the name of any banker, dealer or bank where the access person has an account that holds securities for the access person's straight or indirect benefit; and the date the access person submits the report.

⁴ In that location are exceptions to this requirement. For example, an adviser is non required to provide regular account statements with respect to a registered investment visitor or a express partnership (or another type of pooled investment vehicle) that is subject to an audit at to the lowest degree annually and that distributes its audited financial statements prepared in accordance with more often than not accustomed accounting principles (GAAP) to all investors, generally within 120 days of the end of its financial year (under Dominion 206(4)-2).

http://world wide web.sec.gov/divisions/investment/advoverview.htm