September 22, 2011

 

Reminder: Certain Amendments to Form ADV Part 1A Regarding the Calculation of Assets Under Management ("AUM") and Required Disclosure of Information Regarding Private Funds will be programmed into the IARD System by December 31, 2011

 

In Adopting Release 3221 (June 22, 2011), the Securities and Exchange Commission (the "SEC") adopted certain amendments to Form ADV Part 1A. Most notably, the revisions require additional information regarding an investment adviser’s private fund clients to be disclosed in Section 7.B. of Schedule D of Form ADV ("Section 7B") and alter the manner by which registered investment advisers must calculate their AUM.

 

Additional Disclosure Regarding Private Funds

In the revised Section 7B, registrants and other Form ADV filers who advise private fund clients will be required to disclose an extensive amount of additional information regarding such clients, such as information regarding beneficial ownership, investment strategy, operations, gross asset value and service providers. We strongly encourage all Form ADV filers to review the new Section 7B, a copy of which is attached hereto, so they may be familiar with its requirements and allot the proper resources to its completion in a timely manner.

 

Determination of AUM

The revisions to the Form ADV Instructions change the way a potential registrant must calculate its AUM for reporting purposes and to determine whether an adviser can rely on the private fund adviser exemption. AUM or "regulatory assets under management", as it is defined for these purposes, as revised (i) must be calculated on a gross basis, and (ii) include family and proprietary assets, assets managed for no fee and the amount of any uncalled capital commitments. An adviser is currently allowed to exclude assets it manages for no fee as well as capital commitments from its AUM for SEC reporting purposes.

 

If you have any questions regarding the ADV AUM Amendment, please contact Orical LLP at 212-705-4285 or visit our website at http://www.orical.org.

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