United States: Important Dates And Reminders For Investment Management Advisers, Exempt Reporting Advisers, Commodity Trading Advisors And Commodity Pool Operators

Last Updated: January 31 2013
Article by Meredith A. Haviland and Jeffrey D. Collins

INVESTMENT ADVISERS

Annual Compliance Reviews

All investment advisers registered with the Securities and Exchange Commission ("SEC") are required to review their compliance policies and procedures at least annually (and best practice is for any investment adviser, whether SEC registered or not, to engage in such a review). Many advisers traditionally conduct this review in March of each year. Registered advisers should commence their annual reviews promptly and document the review process.

Form ADV – Annual Amendment Due by April 1st; Delivery of Updated ADVs to Clients

Form ADV for registered advisers (Parts 1 and 2A) and Exempt Reporting Advisers (relevant portions of Part 1), must be updated by April 1, 2013 through the Investment Adviser Registration Depository (IARD) website (www.iard.com). In order to get credit for the filing, please select "annual amendment" when updating the form. Failure to update Form ADV could lead to registration or status as an Exempt Reporting Adviser being revoked.

In addition, registered investment advisers must deliver updated brochures (Part 2A) and brochure supplements (Part 2B) to all clients within 120 days after the end of the adviser's fiscal year.

Form PF

Investment advisers registered with the SEC who manage private funds and have at least $150m in regulatory assets under management attributable to "private fund assets" (as defined in the Form PF) are required to file a Form PF through the IARD website (www.iard.com).

Large Hedge Fund Advisers (advisers with over $1.5 billion in hedge fund assets under management) must file quarterly within 60 calendar days after the end of each quarter, or by March 1, 2013. All other advisers must file annually within 120 days of the end of their fiscal year, or by April 30, 2013 for advisers with a December 31 fiscal year end. Advisers are cautioned to carefully review the definitions on the instructions for Form PF when determining the amount of "private funds assets" and "hedge fund assets."

Advisers who have not yet started preparing their Form PF filings are encouraged to start this process promptly.

Registered Advisers to Funds - Delivery of Audited Financial Statements

Registered investment advisers relying on the "audited financials exception" to the account statement delivery and independent verification requirements of the Custody Rule must deliver such audited financial statements for their fund to investors within 120 days of the end of the fund's fiscal year. Please note that funds which are 4.7 pools for CFTC purposes have a 90 day deadline under CFTC rules (see below). The financial statements must be audited by an independent public accountant that is registered with, and subject to regular inspection by, the Public Company Accounting Oversight Board. Advisers to funds of funds must deliver such statements within 180 days of the end of the fund's fiscal year.

Exempt Reporting Advisers - Delivery of Audited Financial Statements

Exempt reporting advisers in Massachusetts who manage private funds which rely on the exclusion from the definition of "Investment Company" set forth in Section 3(c)(1) of the Investment Company Act of 1940, as amended, which funds are not "venture capital funds" (as defined by the Massachusetts Securities Division), must deliver annual audited financial statements for the fund to each beneficial owner of any such fund.

Exempt reporting advisers qualified in other states should consult their counsel to determine any annual requirements in such states.

Privacy Policy

All investment advisers must circulate a summary of their privacy policy to advisory clients who are natural persons each year.

Section 13(f) Filings

Investment advisers who are required to make quarterly Form 13F filings with the SEC must make such filings within 45 days after the end of each calendar quarter. The first of such filings for this year must be made by February 14, 2013 using EDGAR. These filings are necessary if in the previous calendar year the adviser had under management at least $100 million in securities traded on U.S. securities exchanges (including NASDAQ). Failure to file Form 13F in a timely manner could lead to an enforcement proceeding by the SEC.

Section 13(g) Filings

The SEC permits "qualified institutional investors" (such as registered advisers) and "passive investors" (which may include non-registered advisers) who have five percent or greater beneficial ownership (a broadly defined concept that goes beyond just who owns the shares) of a class of registered equity securities to report this ownership on Schedule 13G, instead of the more demanding Schedule 13D. For "qualified institutional investors," an initial Schedule 13G must be filed using EDGAR within 45 days after the end of the calendar year if as of the end of the calendar year its beneficial ownership exceeds 5% (i.e. by February 14, 2013 with respect to positions from calendar year 2012). In addition, a registered adviser who files Schedule 13G as a qualified institutional investor must notify any person (such as a client) on whose behalf it holds five percent beneficial ownership of any transaction that such person may be required to report (for example, the acquisition of that five percent). For "passive investors," the initial Form 13G filing must be submitted within 10 days of the event which triggers the filing requirement.

With respect to both "qualified institutional investors" and "passive investors," an annual amendment is required to be filed within 45 days after the end of each calendar year to report any change in holdings for that year (i.e. by February 14, 2013). The annual amendment should report holdings as of December 31.

Please note that both qualified institutional investors and passive investors must make additional filings upon certain changes in ownership or changes in investment purpose.

"New Issues Rules" – Annual Eligibility Verification

The New Issues Rules require FINRA members or their associated persons ("Members") to obtain within the twelve months prior to a sale of a new issue to an account holder, either from the account holder or its authorized representative, an affirmative written statement that the account is eligible to purchase new issues in compliance with the New Issues Rules. Members are required to verify this status on an annual basis. The initial verification of an account holder's status under the New Issues Rules must be a positive affirmation of the account holder's non-restricted status. However, the New Issues Rules allow Members to follow a "negative consent" process for annual verification of an account holder's status by sending a notice asking the account holder if there has been any change in its status. Unless an account holder affirmatively reports a change in status, the Member is permitted to rely on its existing information regarding a particular account holder. In many cases, Members rely on representations from investment managers who must, in turn, determine the eligibility status of separate account clients and investors in hedge funds. Investment managers investing in new issues should remember to undertake the annual verification as to new issues eligibility with their clients and investors.

COMMODITY TRADING ADVISORS AND COMMODITY POOL OPERATORS

Form CPO-PQR

Commodity Pool Operators ("CPOs") must file a Form CPO-PQR through the National Futures Association website (www.nfa.futures.org).

Large CPOs (defined to mean any CPO with at least $1 billion in aggregate "pool assets under management" as of the close of business on any day during the relevant reporting period) must complete Schedules A, B and C of the Form CPO-PQR within 60 days of the completion of the most recent calendar quarter, or by March 1, 2013 for the first quarterly filing this year.

Mid-Sized CPOs (defined to mean CPOs with at least $150 million in aggregated "pool assets under management" as of the close of business on any day during the relevant reporting period) must file Schedules A and B of the Form CPO-PQR within 90 days of the end of the calendar year, or by April 1, 2013.

All other CPOs must file Schedule A within 90 days of the end of the calendar year, or by April 1, 2013.

Many CPOs who are dually registered with the CFTC and SEC and required to file a Form PF will have the option to elect to file Form PF for each relevant pool in place of filing a portion of the CPO-PQR, specifically in place of Schedules B and C of the Form CPO-PQR.

Form CTA-PR

All Commodity Trading Advisers ("CTAs") registered or required to be registered with the CFTC must file a Form CTA-PR within 45 days of the end of its fiscal year, or by February 14, 2013 for CTAs with a December 31 fiscal year end.

NFA Rule 2-46 Filings on NFA Form PQR

In addition to the reports described above, all CPOs registered or required to be registered with the CFTC must also file quarterly reports pursuant to NFA Rule 2-46 on NFA Form PQR. Under current NFA Rule 2-46, these reports are due within 45 days of the end of each calendar quarter. Proposed amendments to NFA Rule 2-46 would extend the filing deadline to 60 days after the end of each quarter. We have been advised informally by the NFA that it is currently observing the extended 60 day deadline, however, since this is only informal guidance, we advise CPOs to file within 45 days of the end of each quarter. Accordingly, the first such filing for 2013 is due by February 14, 2013.

CPOs should note that NFA Form PQR incorporates CFTC Form CPO-PQR, the impact of which is that all CPOs (regardless of the amount of assets managed by such CPO) are required to file with the NFA the relevant Schedules of CFTC Form CPO-PQR each quarter as part of the CPO's quarterly NFA Form PQR filing.

CTAs should note that if the proposed amendment to NFA Rule 2-46 is adopted, CTAs will also be required to file NFA Form PR quarterly with the NFA.

CPOs to 4.7 Pools - Delivery of annual audited financials and quarterly account statements

CPOs managing 4.7 pools must deliver to pool participants and file with the NFA certified (per the certification guidelines in Rule 4.7) annual reports that include audited financial statements within 90 days of the end of the fiscal year, or by April 1, 2013. CPOs of fund of funds can request an extension of up to 180 days after the end of the fiscal year to deliver and file these reports. CPOs to 4.7 pools must also deliver quarterly account statements to participants.

Annual Certification - 4.13(a)(3)

Fund managers relying on the exemption from registration with the CFTC set forth in Rule 4.13(a)(3), the so-called "de minimis exemption", must reaffirm their claim of exemption or exclusion from registration each year. The annual affirmation may be made through the NFA's Exemption System (http://www.nfa.futures.org/NFA-electronic-filings/exemptions.HTML) and must be made within 60 days of the end of the calendar year, or by March 1, 2013. Failure to submit an affirmation by this deadline will result in a withdrawal of the exemption from registration.

OTHER REMINDERS

Form SLT

Effective September 30, 2011, the new Treasury International Capital (TIC) Form SLT was required to be filed by certain custodians, investment advisers and investors. Reporting entities include an investment adviser that has $1 billion or more of "reportable securities" as defined as of the last business day of the reporting month. Form SLT must be submitted by the reporting entity with at least $1 billion in reportable securities to the Federal Reserve Bank, no later than the 23rd calendar day of the month following the month of reporting. The Form may be submitted electronically, by mail or fax. Determining whether an adviser must submit this form is complex, and advisers with $1 billion or more in AUM are urged to consult with counsel if they are uncertain whether they should be making this filing.

Annual Massachusetts Corporate Filings

Limited partnerships and limited liability companies formed in Massachusetts and non-Massachusetts limited partnerships and limited liability companies which are qualified to do business in Massachusetts must file an annual report on or about the anniversary date of such entity's formation or qualification, as applicable. There is a $500 fee associated with such annual filing.

Annual Delaware Tax

Limited partnerships and limited liability companies formed in Delaware are required to pay an annual tax in the amount of $250 by June 1 of each year.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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