IM Staff Answers Some ADV Part 2 Questions

The Staff of the Division of Investment Management has published responses to some common questions concerning the new ADV Part 2. The Staff indicated the following: (a) Item 2 does not require a discussion of material changes from the old form of brochure, but an adviser may want to highlight new information within the applicable Item, (b) Item 8.B. does not require an adviser to a private fund to re-state a fund’s PPM but only requires a brief explanation of material risks so long as the adviser refers the client to the disclosure document, (c) an adviser using multiple investment strategies may summarize each strategy and refer clients to a separate disclosure document with a more detailed explanation, (d) an offshore adviser to an offshore private fund need not prepare or file a brochure, and (e) a private fund adviser must prepare and file a brochure but would satisfy delivery by giving it to the General Partner or equivalent. The Staff also provided some guidance on the Brochure Supplement, which requires specific information about the persons providing advice.