Skip to content
A leading resource for registered investment advisers and foreign investors.

Compliance Reminder: Preparing the Annual Updating Amendment.

Each year, registered investment advisers and exempt reporting advisers are required to draft their annual updating amendment and file it within 90 days of their fiscal year end, which in most cases is March 31st.  

Responses to all items must be updated, and failure to file the annual amendment can lead to revocation of the firm’s registration. If the firm is registered with the SEC, but is no longer eligible for registration with the Commission, it must file a Form ADV-W to withdraw registration. Depending on the firm’s activities, it may be required to register with a state securities division or various states. 

Updating the firm’s assets under management seems to be the first thing that comes to mind when preparing for the annual updating amendment if no drastic changes occurred to the firm’s business model, but it’s essential to reflect on the responses to each item. Advisers have been subject to enforcement actions relating to the failure to update responses under the annual amendment. In September of 2022, investment advisers settled charges brought by the SEC and paid combined penalties of over $1 million for failing to have audits performed or to deliver audited financials to investors in certain private funds in a timely manner, thereby violating the Investment Advisers Act’s Custody Rule, and certain advisers failed to promptly file amended Form ADV to reflect they had received audited financial statements after having initially reported that they had not yet received the audit reports. In addition, one adviser did not properly describe the status of its financial statement audits when filing its Form ADV, nor did it update its response in its Form ADV annual updating amendment for multiple years, as required. 

New conflicts of interest may have arisen during the course of the year and should be disclosed in the annual updating amendment. In September of 2023, the SEC announced that Concord, California-based registered investment adviser AssetMark Inc. agreed to pay more than $18 million to settle charges related to undisclosed conflicts of interest involving a cash sweep program operated by its affiliated custodian and its receipt of millions of dollars in revenue sharing payments from third-party custodians. Deciding where to disclose the conflict in the ADV Brochure depends on the context from which the conflict arises. If it has to do with side-by-side management of multiple accounts with different fee structures simultaneously, the conflict should be disclosed in Item 6. If the firm recommends other investment advisers and the firm receives compensation directly or indirectly from those advisers, the conflict should be disclosed in Item 10. There are other areas of the ADV Brochure where disclosure of conflicts of interest is also obligatory. 

Supplementary filing requirements for state registered advisers. 

State registered advisers may have supplemental filing requirements. As an example, the State of Washington requires investment advisers to submit to the Securities Division the investment adviser’s balance sheet dated as of the last day of the most recent fiscal year. If a California-registered investment adviser is subject to the state’s minimum financial requirements, the adviser must file with the Commissioner, not more than 90 days after its fiscal year-end, an annual financial report that reflects its financial condition. Advisers registered with the Florida Office of Financial Regulation (“OFR”) and domiciled in Florida are required to annually file financial statements with the OFR. These are only a few examples of supplementary filings state advisers are required to file. 

Alcantara Law supports both SEC and State registered investment advisers. We guide firms through the annual updating amendment process and ensure that each of their supplementary filings are also submitted on time.