SEC Publishes Brochure Rule Requiring New Disclosures
The new Brochure Rule for ADV Part II, published by the SEC, requires narrative disclosure about 16 substantive areas, an annual summary of material changes, required client updates after disciplinary events, and a supplement containing information about relevant personnel. The new Rule does not require delivery to investors in unregistered funds per the Goldstein decision. The new Brochure includes several of the items already included in ADV Part II, although the new Rule requires substantially more information. One of the most significant new items includes financial information about the Adviser “when material to clients.” The new Rule requires client updates (aka “sticker”) in the event of a change to the disciplinary disclosure and delivery of a brochure supplement for personnel providing advice to the client. The SEC will allow delivery of different brochures to different clients. Firms with a 12/31 fiscal year have until 3/31/11 to file the new Brochure.