SEC 1707 ADV Part 2

OMB APPROVAL
OMB Number:
3235-0049
Expires:
August 31,2014
Estimated average burden
hours per response. . . . . . 10.50

FORM ADV (Paper Version)

UNIFORM APPLICATION FOR INVESTMENT ADVISER REGISTRATION
PART 2: Uniform Requirements for the Investment Adviser Brochure and Brochure Supplements
General Instructions for Part 2 of Form ADV
Under SEC and similar state rules you are required to deliver to clients and prospective clients a brochure disclosing
information about your firm. You also may be required to deliver a brochure supplement disclosing information
about one or more of your supervised persons. Part 2 of Form ADV sets out the minimum required disclosure that
your brochure (Part 2A for a firm brochure, or Appendix 1 for a wrap fee program brochure) and brochure
supplements (Part 2B) must contain.
Read all the instructions, including General Instructions for Form ADV, General Instructions for Part 2 of Form
ADV, Instructions for Part 2A of Form ADV, Instructions for Part 2B of Form ADV, and (if you are preparing or
updating a wrap fee program brochure) Instructions for Part 2A Appendix 1 of Form ADV, before preparing or
updating your brochure or brochure supplements.
1.

Narrative Format. Part 2 of Form ADV consists of a series of items that contain disclosure requirements for
your firm’s brochure and any required supplements. The items require narrative responses. You must respond
to each item in Part 2. You must include the heading for each item provided by Part 2 immediately preceding
your response to that item and provide responses in the same order as the items appear in Part 2. If an item does
not apply to your business, you must indicate that item is not applicable. If you have provided information in
response to one item that is also responsive to another item, you may cross-reference that information in
response to the other item.

2.

Plain English. The items in Part 2 of Form ADV are designed to promote effective communication between
you and your clients. Write your brochure and supplements in plain English, taking into consideration your
clients’ level of financial sophistication. Your brochure should be concise and direct. In drafting your
brochure and brochure supplements, you should: (i) use short sentences; (ii) use definite, concrete, everyday
words; (iii) use active voice; (iv) use tables or bullet lists for complex material, whenever possible; (v) avoid
legal jargon or highly technical business terms unless you explain them or you believe that your clients will
understand them; and (vi) avoid multiple negatives. Consider providing examples to illustrate a description of
your practices or policies. The brochure should discuss only conflicts the adviser has or is reasonably likely to
have, and practices in which it engages or is reasonably likely to engage. If a conflict arises or the adviser
decides to engage in a practice that it has not disclosed, supplemental disclosure must be provided to clients to
obtain their consent. If you have a conflict or engage in a practice with respect to some (but not all) types or
classes of clients, advice, or transactions, indicate as such rather than disclosing that you “may” have the
conflict or engage in the practice.
Note: The SEC’s Office of Investor Education and Advocacy has published A Plain English Handbook. You
may find the handbook helpful in writing your brochure and supplements. For a copy of this handbook, visit
the SEC’s web site at or call 1-800-732-0330.

3.

Disclosure Obligations as a Fiduciary. Under federal and state law, you are a fiduciary and must make full
disclosure to your clients of all material facts relating to the advisory relationship. As a fiduciary, you also must
seek to avoid conflicts of interest with your clients, and, at a minimum, make full disclosure of all material
conflicts of interest between you and your clients that could affect the advisory relationship. This obligation

Form ADV: Instructions for Part 2

Page 2

requires that you provide the client with sufficiently specific facts so that the client is able to understand the
conflicts of interest you have and the business practices in which you engage, and can give informed consent to
such conflicts or practices or reject them. To satisfy this obligation, you therefore may have to disclose to
clients information not specifically required by Part 2 of Form ADV or in more detail than the brochure items
might otherwise require. You may disclose this additional information to clients in your brochure or by some
other means.
4.

Full and Truthful Disclosure. All information in your brochure and brochure supplements must be true and
may not omit any material facts.

5.

Filing. You must file your brochure(s) (and amendments) through the IARD system using the text-searchable
Adobe Portable Document Format (“PDF”). See SEC rules 203-1 and 204-1 and similar state rules. If you are
registered or are registering with the SEC, you are not required to file your brochure supplements through the
IARD or otherwise. You must, however, preserve a copy of the supplements and make them available to SEC
staff upon request. See SEC rule 204-2(a)(14). If you are registered or are registering with one or more state
securities authorities, you must file a copy of the brochure supplement for each supervised person doing
business in that state.

Instructions for Part 2A of Form ADV: Preparing Your Firm Brochure
1.

To whom must we deliver a firm brochure? You must give a firm brochure to each client. You must deliver
the brochure even if your advisory agreement with the client is oral. See SEC rule 204-3(b) and similar state
rules.
If you are registered with the SEC, you are not required to deliver your brochure to either (i) clients who
receive only impersonal investment advice from you and who will pay you less than $500 per year or (ii) clients
that are SEC-registered investment companies or business development companies (the client must be
registered under the Investment Company Act of 1940 or be a business development company as defined in that
Act, and the advisory contract must meet the requirements of section 15(c) of that Act). See SEC rule 204-3(c).
Note: Even if you are not required to give a brochure to a client, as a fiduciary you may still be required to
provide your clients with similar information, particularly material information about your conflicts of interest
and about your disciplinary information. If you are not required to give a client a brochure, you may make any
required disclosures to that client by delivery of your brochure or through some other means.

2.

When must we deliver a brochure to clients?
You must give a firm brochure to each client before or at the time you enter into an advisory agreement with
that client. See SEC rule 204-3(b) and similar state rules.
Each year you must (i) deliver, within 120 days of the end of your fiscal year, to each client a free updated
brochure that either includes a summary of material changes or is accompanied by a summary of material
changes, or (ii) deliver to each client a summary of material changes that includes an offer to provide a copy
of the updated brochure and information on how a client may obtain the brochure. See SEC rule 204-3(b)
and similar state rules.
You do not have to deliver an interim amendment to clients unless the amendment includes information in
response to Item 9 of Part 2A (disciplinary information). An interim amendment can be in the form of a
document describing the material facts relating to the amended disciplinary event. See SEC rule 204-3(b)
and similar state rules.
Note: As a fiduciary, you have an ongoing obligation to inform your clients of any material information that
could affect the advisory relationship. As a result, between annual updating amendments you must disclose
material changes to such information to clients even if those changes do not trigger delivery of an interim
amendment. See General Instructions for Part 2 of Form ADV, Instruction 3.

3.

May we deliver our brochure electronically? Yes. The SEC has published interpretive guidance on delivering
documents electronically, which you can find at .

4.

When must we update our brochure? You must update your brochure: (i) each year at the time you file your
annual updating amendment; and (ii) promptly whenever any information in the brochure becomes materially
inaccurate. You are not required to update your brochure between annual amendments solely because the
amount of client assets you manage has changed or because your fee schedule has changed. However, if you
are updating your brochure for a separate reason in between annual amendments, and the amount of client
assets you manage listed in response to Item 4.E or your fee schedule listed in response to Item 5.A has become
materially inaccurate, you should update that item(s) as part of the interim amendment. All updates to your
brochure must be filed through the IARD system and maintained in your files. See SEC rules 204-1 and 2042(a)(14) and similar state rules.

5.

We are filing our annual updating amendment. The last brochure(s) that we filed does not contain any
materially inaccurate information. Do we have to prepare a summary of material changes? No, as long as you

Form ADV: Instructions for Part 2A

Page 2

have not filed any interim amendments making material changes to the brochure that you filed with last year’s
annual updating amendment. If you do not have to prepare a summary of material changes, you do not have to
deliver a summary of material changes or a brochure to your existing clients that year. See SEC rule 204-3(b).
If you are a state-registered adviser, you should contact the appropriate state securities authorities to determine
whether you must make an annual offer of the brochure.
6.

Do we need to include the summary of material changes that we prepare in response to Item 2 with our annual
updating amendment filing on IARD? Yes, you need to include the summary in your annual updating
amendment. Item 2 permits you to include the summary as part of the brochure (on the cover page or the page
immediately following the cover page) or to create a separate document containing the summary. If you include
the summary as part of your brochure, the summary will be part of the annual updating amendment filing that
you submit on IARD. If your summary of material changes is a separate document, you must attach the
summary as an exhibit to your brochure and upload your brochure and the summary together in a single, textsearchable file in Adobe Portable Document Format on IARD for your annual updating amendment.
Note: If you include the summary of material changes in your brochure, and you revise or update your
brochure between annual updating amendments, you should consider whether you should update the summary
as part of that other-than annual amendment to avoid confusing or misleading clients reading the updated
brochure.

7.

We have determined that we have no clients to whom we must deliver a brochure. Must we prepare one? No,
but see note to Instruction 1 above.

8.

May we include a summary of the brochure at the beginning of our brochure? Yes. Although it is not
required, you may choose to include a summary of the brochure at the beginning of your brochure. Such
summary, however, may not substitute for the summary of material changes required by Item 2 of Part 2A.

9.

We offer several advisory services. May we prepare multiple firm brochures? Yes. If you offer substantially
different types of advisory services, you may opt to prepare separate brochures so long as each client receives
all applicable information about services and fees. Each brochure may omit information that does not apply to
the advisory services and fees it describes. For example, your firm brochure sent to your clients who invest
only in the United States can omit information about your advisory services and fees relating to offshore
investments. See SEC rule 204-3(e) and similar state rules. If you prepare separate brochures you must file
each brochure (and any amendments) through the IARD system as required in SEC rules 203-1 and 204-1 and
similar state rules.

10. We sponsor a wrap fee program. Is there a different brochure that we need to deliver to our wrap fee clients?
Yes. If you sponsor a wrap fee program, you must deliver a wrap fee program brochure to your wrap fee
clients. The disclosure requirements for preparing a wrap fee program brochure appear in Part 2A, Appendix 1
of Form ADV. If your entire advisory business is sponsoring wrap fee programs, you do not need to prepare a
firm brochure separate from your wrap fee program brochure(s). See SEC rule 204-3(d) and similar state rules.
11. We provide portfolio management services to clients in wrap fee programs that we do not sponsor. Which
brochure must we deliver to these clients? You must deliver your brochure prepared in accordance with Part
2A (not Appendix 1) to your wrap fee clients. You also must deliver to these clients any brochure supplements
required by Part 2B of Form ADV.
12. May we include information not required by an item in our brochure? Yes. If you include information not
required by an item, however, you may not include so much additional information that the required
information is obscured.
13. Item 18 requires us to give our clients an audited balance sheet. May any public accountant perform the audit?
Your auditor must be independent. Article 2 of SEC Regulation S-X sets out the general rules for auditor

Form ADV: Instructions for Part 2A

Page 3

independence. Please note that these requirements may be different from the rules of professional
organizations.
14. We are a new firm. Do we need a brochure? Yes. Respond to items in Part 2A of Form ADV based on the
advisory services you propose to provide and the practices, policies and procedures you propose to adopt.
15. We are a “separately identifiable department or division” (SID) of a bank. Must our brochure discuss our
bank’s general business practices? No. Information you include in your firm brochure (or in brochure
supplements) should be information about you, the SID, and your business practices, rather than general
information about your bank.

Part 2A of Form ADV: Firm Brochure
Item 1

Cover Page

A. The cover page of your brochure must state your name, business address, contact information, website
address (if you have one), and the date of the brochure.
Note: If you primarily conduct advisory business under a name different from your full legal name, and
you have disclosed your business name in Item 1.B of Part 1A of Form ADV, then you may use your
business name throughout your brochure.
B. Display on the cover page of your brochure the following statement or other clear and concise language
conveying the same information, and identifying the document as a “brochure”:
This brochure provides information about the qualifications and business practices of [your name].
If you have any questions about the contents of this brochure, please contact us at [telephone number
and/or email address]. The information in this brochure has not been approved or verified by the
United States Securities and Exchange Commission or by any state securities authority.
Additional information about [your name] also is available on the SEC’s website at
www.adviserinfo.sec.gov.
C. If you refer to yourself as a “registered investment adviser” or describe yourself as being “registered,”
include a statement that registration does not imply a certain level of skill or training.
Item 2

Material Changes

If you are amending your brochure for your annual update and it contains material changes from your last annual
update, identify and discuss those changes on the cover page of the brochure or on the page immediately following
the cover page, or as a separate document accompanying the brochure. You must state clearly that you are
discussing only material changes since the last annual update of your brochure, and you must provide the date of the
last annual update of your brochure.
Note:

Item 3

You do not have to separately provide this information to a client or prospective client who has not
received a previous version of your brochure.
Table of Contents

Provide a table of contents to your brochure.
Note: Your table of contents must be detailed enough so that your clients can locate topics easily. Your brochure
must follow the same order, and contain the same headings, as the items listed in Part 2A.
Item 4

Advisory Business

A. Describe your advisory firm, including how long you have been in business. Identify your principal
owner(s).
Notes: (1) For purposes of this item, your principal owners include the persons you list as owning 25% or
more of your firm on Schedule A of Part 1A of Form ADV (Ownership Codes C, D or E). (2) If you are a
publicly held company without a 25% shareholder, simply disclose that you are publicly held. (3) If an
individual or company owns 25% or more of your firm through subsidiaries, you must identify the
individual or parent company and intermediate subsidiaries. If you are an SEC-registered adviser, you

Form ADV: Part 2A

Page 2

must identify intermediate subsidiaries that are publicly held, but not other intermediate subsidiaries. If you
are a state-registered adviser, you must identify all intermediate subsidiaries.
B. Describe the types of advisory services you offer. If you hold yourself out as specializing in a particular
type of advisory service, such as financial planning, quantitative analysis, or market timing, explain the
nature of that service in greater detail. If you provide investment advice only with respect to limited types
of investments, explain the type of investment advice you offer, and disclose that your advice is limited to
those types of investments.
C. Explain whether (and, if so, how) you tailor your advisory services to the individual needs of clients.
Explain whether clients may impose restrictions on investing in certain securities or types of securities.
D. If you participate in wrap fee programs by providing portfolio management services, (1) describe the
differences, if any, between how you manage wrap fee accounts and how you manage other accounts, and
(2) explain that you receive a portion of the wrap fee for your services.
E. If you manage client assets, disclose the amount of client assets you manage on a discretionary basis and
the amount of client assets you manage on a non-discretionary basis. Disclose the date “as of” which you
calculated the amounts.
Note: Your method for computing the amount of “client assets you manage” can be different from the method
for computing “regulatory assets under management” required for Item 5.F in Part 1A. However, if you choose
to use a different method to compute “client assets you manage,” you must keep documentation describing the
method you use. The amount you disclose may be rounded to the nearest $100,000. Your “as of” date must not
be more than 90 days before the date you last updated your brochure in response to this Item 4.E.
Item 5

Fees and Compensation

A. Describe how you are compensated for your advisory services. Provide your fee schedule. Disclose
whether the fees are negotiable.
Note: If you are an SEC-registered adviser, you do not need to include this information in a brochure that is
delivered only to qualified purchasers as defined in section 2(a)(51)(A) of the Investment Company Act of
1940.
B. Describe whether you deduct fees from clients’ assets or bill clients for fees incurred. If clients may select
either method, disclose this fact. Explain how often you bill clients or deduct your fees.
C. Describe any other types of fees or expenses clients may pay in connection with your advisory services,
such as custodian fees or mutual fund expenses. Disclose that clients will incur brokerage and other
transaction costs, and direct clients to the section(s) of your brochure that discuss brokerage.
D. If your clients either may or must pay your fees in advance, disclose this fact. Explain how a client may
obtain a refund of a pre-paid fee if the advisory contract is terminated before the end of the billing period.
Explain how you will determine the amount of the refund.
E. If you or any of your supervised persons accepts compensation for the sale of securities or other investment
products, including asset-based sales charges or service fees from the sale of mutual funds, disclose this
fact and respond to Items 5.E.1, 5.E.2, 5.E.3 and 5.E.4.
1.

Explain that this practice presents a conflict of interest and gives you or your supervised persons an
incentive to recommend investment products based on the compensation received, rather than on a
client’s needs. Describe generally how you address conflicts that arise, including your procedures for

Form ADV: Part 2A

Page 3

disclosing the conflicts to clients. If you primarily recommend mutual funds, disclose whether you
will recommend “no-load” funds.
2.

Explain that clients have the option to purchase investment products that you recommend through
other brokers or agents that are not affiliated with you.

3.

If more than 50% of your revenue from advisory clients results from commissions and other
compensation for the sale of investment products you recommend to your clients, including assetbased distribution fees from the sale of mutual funds, disclose that commissions provide your primary
or, if applicable, your exclusive compensation.

4.

If you charge advisory fees in addition to commissions or markups, disclose whether you reduce your
advisory fees to offset the commissions or markups.

Note: If you receive compensation in connection with the purchase or sale of securities, you should
carefully consider the applicability of the broker-dealer registration requirements of the Securities
Exchange Act of 1934 and any applicable state securities statutes.
Item 6

Performance-Based Fees and Side-By-Side Management

If you or any of your supervised persons accepts performance-based fees – that is, fees based on a share of capital
gains on or capital appreciation of the assets of a client (such as a client that is a hedge fund or other pooled
investment vehicle) – disclose this fact. If you or any of your supervised persons manage both accounts that are
charged a performance-based fee and accounts that are charged another type of fee, such as an hourly or flat fee or
an asset-based fee, disclose this fact. Explain the conflicts of interest that you or your supervised persons face by
managing these accounts at the same time, including that you or your supervised persons have an incentive to favor
accounts for which you or your supervised persons receive a performance-based fee, and describe generally how
you address these conflicts.
Item 7

Types of Clients

Describe the types of clients to whom you generally provide investment advice, such as individuals, trusts,
investment companies, or pension plans. If you have any requirements for opening or maintaining an account, such
as a minimum account size, disclose the requirements.
Item 8

Methods of Analysis, Investment Strategies and Risk of Loss

A. Describe the methods of analysis and investment strategies you use in formulating investment advice or
managing assets. Explain that investing in securities involves risk of loss that clients should be prepared to
bear.
B. For each significant investment strategy or method of analysis you use, explain the material risks involved.
If the method of analysis or strategy involves significant or unusual risks, discuss these risks in detail. If
your primary strategy involves frequent trading of securities, explain how frequent trading can affect
investment performance, particularly through increased brokerage and other transaction costs and taxes.
C. If you recommend primarily a particular type of security, explain the material risks involved. If the type of
security involves significant or unusual risks, discuss these risks in detail.

Form ADV: Part 2A

Item 9

Page 4

Disciplinary Information

If there are legal or disciplinary events that are material to a client’s or prospective client’s evaluation of your
advisory business or the integrity of your management, disclose all material facts regarding those events.
Items 9.A, 9.B, and 9.C list specific legal and disciplinary events presumed to be material for this Item. If your
advisory firm or a management person has been involved in one of these events, you must disclose it under this
Item for ten years following the date of the event, unless (1) the event was resolved in your or the management
person’s favor, or was reversed, suspended or vacated, or (2) you have rebutted the presumption of materiality
to determine that the event is not material (see Note below). For purposes of calculating this ten-year period,
the “date” of an event is the date that the final order, judgment, or decree was entered, or the date that any rights
of appeal from preliminary orders, judgments or decrees lapsed.
Items 9.A, 9.B, and 9.C do not contain an exclusive list of material disciplinary events. If your advisory firm or
a management person has been involved in a legal or disciplinary event that is not listed in Items 9.A, 9.B, or
9.C, but nonetheless is material to a client's or prospective client's evaluation of your advisory business or the
integrity of its management, you must disclose the event. Similarly, even if more than ten years have passed
since the date of the event, you must disclose the event if it is so serious that it remains material to a client’s or
prospective client’s evaluation.
A. A criminal or civil action in a domestic, foreign or military court of competent jurisdiction in which your
firm or a management person
1.

was convicted of, or pled guilty or nolo contendere (“no contest”) to (a) any felony; (b) a misdemeanor
that involved investments or an investment-related business, fraud, false statements or omissions,
wrongful taking of property, bribery, perjury, forgery, counterfeiting, or extortion; or (c) a conspiracy
to commit any of these offenses;

2.

is the named subject of a pending criminal proceeding that involves an investment-related business,
fraud, false statements or omissions, wrongful taking of property, bribery, perjury, forgery,
counterfeiting, extortion, or a conspiracy to commit any of these offenses;

3.

was found to have been involved in a violation of an investment-related statute or regulation; or

4.

was the subject of any order, judgment, or decree permanently or temporarily enjoining, or otherwise
limiting, your firm or a management person from engaging in any investment-related activity, or from
violating any investment-related statute, rule, or order.

B. An administrative proceeding before the SEC, any other federal regulatory agency, any state regulatory
agency, or any foreign financial regulatory authority in which your firm or a management person
1.

was found to have caused an investment-related business to lose its authorization to do business; or

2.

was found to have been involved in a violation of an investment-related statute or regulation and was
the subject of an order by the agency or authority
(a) denying, suspending, or revoking the authorization of your firm or a management person to act in
an investment-related business;
(b) barring or suspending your firm’s or a management person's association with an investmentrelated business;
(c) otherwise significantly limiting your firm’s or a management person's investment-related
activities; or

Form ADV: Part 2A

Page 5

(d) imposing a civil money penalty of more than $2,500 on your firm or a management person.
C. A self-regulatory organization (SRO) proceeding in which your firm or a management person
1.

was found to have caused an investment-related business to lose its authorization to do business; or

2.

was found to have been involved in a violation of the SRO’s rules and was: (i) barred or suspended
from membership or from association with other members, or was expelled from membership;
(ii) otherwise significantly limited from investment-related activities; or (iii) fined more than $2,500.

Note: You may, under certain circumstances, rebut the presumption that a disciplinary event is material. If an
event is immaterial, you are not required to disclose it. When you review a legal or disciplinary event involving
your firm or a management person to determine whether it is appropriate to rebut the presumption of
materiality, you should consider all of the following factors: (1) the proximity of the person involved in the
disciplinary event to the advisory function; (2) the nature of the infraction that led to the disciplinary event; (3)
the severity of the disciplinary sanction; and (4) the time elapsed since the date of the disciplinary event. If you
conclude that the materiality presumption has been overcome, you must prepare and maintain a file
memorandum of your determination in your records. See SEC rule 204-2(a)(14)(iii).
Item 10

Other Financial Industry Activities and Affiliations

A. If you or any of your management persons are registered, or have an application pending to register, as a
broker-dealer or a registered representative of a broker-dealer, disclose this fact.
B. If you or any of your management persons are registered, or have an application pending to register, as a
futures commission merchant, commodity pool operator, a commodity trading advisor, or an associated
person of the foregoing entities, disclose this fact.
C. Describe any relationship or arrangement that is material to your advisory business or to your clients that
you or any of your management persons have with any related person listed below. Identify the related
person and if the relationship or arrangement creates a material conflict of interest with clients, describe the
nature of the conflict and how you address it.
1.
2.

broker-dealer, municipal securities dealer, or government securities dealer or broker
investment company or other pooled investment vehicle (including a mutual fund, closed-end
investment company, unit investment trust, private investment company or “hedge fund,” and offshore
fund)
3. other investment adviser or financial planner
4. futures commission merchant, commodity pool operator, or commodity trading advisor
5. banking or thrift institution
6. accountant or accounting firm
7. lawyer or law firm
8. insurance company or agency
9. pension consultant
10. real estate broker or dealer
11. sponsor or syndicator of limited partnerships.
D. If you recommend or select other investment advisers for your clients and you receive compensation
directly or indirectly from those advisers that creates a material conflict of interest, or if you have other
business relationships with those advisers that create a material conflict of interest, describe these practices
and discuss the material conflicts of interest these practices create and how you address them.

Form ADV: Part 2A

Page 6

Code of Ethics, Participation or Interest in Client Transactions and Personal Trading

Item 11

A. If you are an SEC-registered adviser, briefly describe your code of ethics adopted pursuant to SEC rule
204A-1 or similar state rules. Explain that you will provide a copy of your code of ethics to any client or
prospective client upon request.
B. If you or a related person recommends to clients, or buys or sells for client accounts, securities in which
you or a related person has a material financial interest, describe your practice and discuss the conflicts of
interest it presents. Describe generally how you address conflicts that arise.
Examples: (1) You or a related person, as principal, buys securities from (or sells securities to) your
clients; (2) you or a related person acts as general partner in a partnership in which you solicit client
investments; or (3) you or a related person acts as an investment adviser to an investment company that
you recommend to clients.
C. If you or a related person invests in the same securities (or related securities, e.g., warrants, options or
futures) that you or a related person recommends to clients, describe your practice and discuss the conflicts
of interest this presents and generally how you address the conflicts that arise in connection with personal
trading.
D. If you or a related person recommends securities to clients, or buys or sells securities for client accounts, at
or about the same time that you or a related person buys or sells the same securities for your own (or the
related person's own) account, describe your practice and discuss the conflicts of interest it presents.
Describe generally how you address conflicts that arise.
Note: The description required by Item 11.A may include information responsive to Item 11.B, C or D. If so, it is
not necessary to make repeated disclosures of the same information. You do not have to provide disclosure in
response to Item 11.B, 11.C, or 11.D with respect to securities that are not “reportable securities” under SEC rule
204A-1(e)(10) and similar state rules.
Item 12

Brokerage Practices

A. Describe the factors that you consider in selecting or recommending broker-dealers for client transactions
and determining the reasonableness of their compensation (e.g., commissions).
1.

Research and Other Soft Dollar Benefits. If you receive research or other products or services other
than execution from a broker-dealer or a third party in connection with client securities transactions
(“soft dollar benefits”), disclose your practices and discuss the conflicts of interest they create.
Note: Your disclosure and discussion must include all soft dollar benefits you receive, including, in
the case of research, both proprietary research (created or developed by the broker-dealer) and research
created or developed by a third party.
a.

Explain that when you use client brokerage commissions (or markups or markdowns) to obtain
research or other products or services, you receive a benefit because you do not have to produce or
pay for the research, products or services.

b.

Disclose that you may have an incentive to select or recommend a broker-dealer based on your
interest in receiving the research or other products or services, rather than on your clients’ interest
in receiving most favorable execution.

Form ADV: Part 2A

Page 7

c.

If you may cause clients to pay commissions (or markups or markdowns) higher than those
charged by other broker-dealers in return for soft dollar benefits (known as paying-up), disclose
this fact.

d.

Disclose whether you use soft dollar benefits to service all of your clients’ accounts or only those
that paid for the benefits. Disclose whether you seek to allocate soft dollar benefits to client
accounts proportionately to the soft dollar credits the accounts generate.

e.

Describe the types of products and services you or any of your related persons acquired with
client brokerage commissions (or markups or markdowns) within your last fiscal year.
Note: This description must be specific enough for your clients to understand the types of
products or services that you are acquiring and to permit them to evaluate possible conflicts of
interest. Your description must be more detailed for products or services that do not qualify for
the safe harbor in section 28(e) of the Securities Exchange Act of 1934, such as those services that
do not aid in investment decision-making or trade execution. Merely disclosing that you obtain
various research reports and products is not specific enough.

f.
2.

3.

Explain the procedures you used during your last fiscal year to direct client transactions to a
particular broker-dealer in return for soft dollar benefits you received.

Brokerage for Client Referrals. If you consider, in selecting or recommending broker-dealers, whether
you or a related person receives client referrals from a broker-dealer or third party, disclose this
practice and discuss the conflicts of interest it creates.
a.

Disclose that you may have an incentive to select or recommend a broker-dealer based on your
interest in receiving client referrals, rather than on your clients’ interest in receiving most
favorable execution.

b.

Explain the procedures you used during your last fiscal year to direct client transactions to a
particular broker-dealer in return for client referrals.

Directed Brokerage.
a.

If you routinely recommend, request or require that a client direct you to execute transactions
through a specified broker-dealer, describe your practice or policy. Explain that not all advisers
require their clients to direct brokerage. If you and the broker-dealer are affiliates or have another
economic relationship that creates a material conflict of interest, describe the relationship and
discuss the conflicts of interest it presents. Explain that by directing brokerage you may be unable
to achieve most favorable execution of client transactions, and that this practice may cost clients
more money.

b.

If you permit a client to direct brokerage, describe your practice. If applicable, explain that you
may be unable to achieve most favorable execution of client transactions. Explain that directing
brokerage may cost clients more money. For example, in a directed brokerage account, the client
may pay higher brokerage commissions because you may not be able to aggregate orders to reduce
transaction costs, or the client may receive less favorable prices.
Note: If your clients only have directed brokerage arrangements subject to most favorable
execution of client transactions, you do not need to respond to the last sentence of Item 12.A.3.a.
or to the second or third sentences of Item 12.A.3.b.

Form ADV: Part 2A

Page 8

B. Discuss whether and under what conditions you aggregate the purchase or sale of securities for various
client accounts. If you do not aggregate orders when you have the opportunity to do so, explain your
practice and describe the costs to clients of not aggregating.
Item 13

Review of Accounts

A. Indicate whether you periodically review client accounts or financial plans. If you do, describe the
frequency and nature of the review, and the titles of the supervised persons who conduct the review.
B. If you review client accounts on other than a periodic basis, describe the factors that trigger a review.
C. Describe the content and indicate the frequency of regular reports you provide to clients regarding their
accounts. State whether these reports are written.
Item 14

Client Referrals and Other Compensation

A. If someone who is not a client provides an economic benefit to you for providing investment advice or
other advisory services to your clients, generally describe the arrangement, explain the conflicts of interest,
and describe how you address the conflicts of interest. For purposes of this Item, economic benefits
include any sales awards or other prizes.
B. If you or a related person directly or indirectly compensates any person who is not your supervised person
for client referrals, describe the arrangement and the compensation.
Note: If you compensate any person for client referrals, you should consider whether SEC rule 206(4)-3 or
similar state rules regarding solicitation arrangements and/or state rules requiring registration of investment
adviser representatives apply.
Item 15

Custody

If you have custody of client funds or securities and a qualified custodian sends quarterly, or more frequent, account
statements directly to your clients, explain that clients will receive account statements from the broker-dealer, bank
or other qualified custodian and that clients should carefully review those statements. If your clients also receive
account statements from you, your explanation must include a statement urging clients to compare the account
statements they receive from the qualified custodian with those they receive from you.
Item 16

Investment Discretion

If you accept discretionary authority to manage securities accounts on behalf of clients, disclose this fact and
describe any limitations clients may (or customarily do) place on this authority. Describe the procedures you follow
before you assume this authority (e.g., execution of a power of attorney).
Item 17

Voting Client Securities

A. If you have, or will accept, authority to vote client securities, briefly describe your voting policies and
procedures, including those adopted pursuant to SEC rule 206(4)-6. Describe whether (and, if so, how)
your clients can direct your vote in a particular solicitation. Describe how you address conflicts of interest
between you and your clients with respect to voting their securities. Describe how clients may obtain
information from you about how you voted their securities. Explain to clients that they may obtain a copy
of your proxy voting policies and procedures upon request.

Form ADV: Part 2A

Page 9

B. If you do not have authority to vote client securities, disclose this fact. Explain whether clients will receive
their proxies or other solicitations directly from their custodian or a transfer agent or from you, and discuss
whether (and, if so, how) clients can contact you with questions about a particular solicitation.
Item 18

Financial Information

A. If you require or solicit prepayment of more than $1,200 in fees per client, six months or more in advance,
include a balance sheet for your most recent fiscal year.
1.

The balance sheet must be prepared in accordance with generally accepted accounting principles,
audited by an independent public accountant, and accompanied by a note stating the principles used to
prepare it, the basis of securities included, and any other explanations required for clarity.

2.

Show parenthetically the market or fair value of securities included at cost.

3.

Qualifications of the independent public accountant and any accompanying independent public
accountant’s report must conform to Article 2 of SEC Regulation S-X.

Note: If you are a sole proprietor, show investment advisory business assets and liabilities separate from
other business and personal assets and liabilities. You may aggregate other business and personal assets
unless advisory business liabilities exceed advisory business assets.
Note: If you have not completed your first fiscal year, include a balance sheet dated not more than 90 days
prior to the date of your brochure.
Exception: You are not required to respond to Item 18.A of Part 2A if you also are: (i) a qualified
custodian as defined in SEC rule 206(4)-2 or similar state rules; or (ii) an insurance company.
B. If you have discretionary authority or custody of client funds or securities, or you require or solicit
prepayment of more than $1,200 in fees per client, six months or more in advance, disclose any financial
condition that is reasonably likely to impair your ability to meet contractual commitments to clients.
Note: With respect to Items 18.A and 18.B, if you are registered or are registering with one or more of the
state securities authorities, the dollar amount reporting threshold for including the required balance sheet
and for making the required financial condition disclosures is more than $500 in fees per client, six months
or more in advance.
C. If you have been the subject of a bankruptcy petition at any time during the past ten years, disclose this
fact, the date the petition was first brought, and the current status.
If you are registering or are registered with one or more state securities authorities, you must respond to the
following additional Item.
Item 19

Requirements for State-Registered Advisers

A. Identify each of your principal executive officers and management persons, and describe their formal
education and business background. If you have supplied this information elsewhere in your Form ADV,
you do not need to repeat it in response to this Item.
B. Describe any business in which you are actively engaged (other than giving investment advice) and the
approximate amount of time spent on that business. If you have supplied this information elsewhere in
your Form ADV, you do not need to repeat it in response to this Item.

Form ADV: Part 2A

Page 10

C. In addition to the description of your fees in response to Item 5 of Part 2A, if you or a supervised person
are compensated for advisory services with performance-based fees, explain how these fees will be
calculated. Disclose specifically that performance-based compensation may create an incentive for the
adviser to recommend an investment that may carry a higher degree of risk to the client.
D. If you or a management person has been involved in one of the events listed below, disclose all material
facts regarding the event.
1.

An award or otherwise being found liable in an arbitration claim alleging damages in excess of $2,500,
involving any of the following:
(a)
(b)
(c)
(d)
(e)

2.

an investment or an investment-related business or activity;
fraud, false statement(s), or omissions;
theft, embezzlement, or other wrongful taking of property;
bribery, forgery, counterfeiting, or extortion; or
dishonest, unfair, or unethical practices.

An award or otherwise being found liable in a civil, self-regulatory organization, or administrative
proceeding involving any of the following:
(a)
(b)
(c)
(d)
(e)

an investment or an investment-related business or activity;
fraud, false statement(s), or omissions;
theft, embezzlement, or other wrongful taking of property;
bribery, forgery, counterfeiting, or extortion; or
dishonest, unfair, or unethical practices.

E. In addition to any relationship or arrangement described in response to Item 10.C. of Part 2A, describe any
relationship or arrangement that you or any of your management persons have with any issuer of securities
that is not listed in Item 10.C. of Part 2A.

Instructions for Part 2A Appendix 1 of Form ADV:
Preparing Your Wrap Fee Program Brochure
Read all the instructions, including General Instructions for Form ADV, General Instructions for Part 2 of Form
ADV, Instructions for Part 2A of Form ADV, and the instructions below, before preparing or updating your wrap
fee program brochure.
1.

Who must deliver a wrap fee program brochure? If you sponsor a wrap fee program, you must give a wrap fee
program brochure to each client of the wrap fee program.
However, if a wrap fee program that you sponsor has multiple sponsors and another sponsor creates and
delivers to your wrap fee program clients a wrap fee program brochure that includes all the information
required in your wrap brochure, you do not have to create or deliver a separate wrap fee program brochure.
A wrap fee program brochure takes the place of your advisory firm brochure required by Part 2A of Form
ADV, but only for clients of wrap fee programs that you sponsor. See SEC rule 204-3(d) and similar state
rules.

2.

When must a wrap fee program brochure be delivered?
You must give a wrap fee program brochure to each client of the wrap fee program before or at the time
the client enters into a wrap fee program contract. See SEC rule 204-3(b) and similar state rules.
Each year you must (i) deliver, within 120 days of the end of your fiscal year, to each client a free updated
wrap fee program brochure that either includes a summary of material changes or is accompanied by a
summary of material changes, or (ii) deliver to each client a summary of material changes that includes an
offer to provide a copy of the updated wrap fee program brochure and information on how a client may
obtain the wrap fee program brochure. See SEC rule 204-3(b) and similar state rules.
You do not have to deliver an interim amendment to clients unless the amendment includes information in
response to Item 9 of Part 2A (disciplinary information). An interim amendment can be in the form of a
document describing the material facts relating to the amended disciplinary event. See SEC rule 204-3(b)
and similar state rules.
Note: As a fiduciary, you have an ongoing obligation to inform your clients of any material information that
could affect the advisory relationship. As a result, between annual updating amendments you must disclose
material changes to such information to clients even if those changes do not trigger delivery of an interim
amendment. See General Instructions for Part 2 of Form ADV, Instruction 3.

3.

When must we update our wrap fee program brochure? You must update your wrap fee program brochure: (i)
each year at the time you file your annual updating amendment, and (ii) promptly whenever any information in
the wrap fee program brochure becomes materially inaccurate. You are not required to update your wrap fee
program brochure between annual amendments solely because your fee schedule has changed. However, if
you are updating your wrap fee program brochure for a separate reason in between annual amendments, and
your fee schedule listed in response to Item 4.A has become materially inaccurate, you should update that item
as part of the interim amendment. All updates to your wrap fee program brochure must be filed through the
IARD system and maintained in your files. See SEC rules 204-1 and 204-2(a)(14) and similar state rules.

4.

May we deliver our wrap fee program brochure electronically? Yes. The SEC has published interpretive
guidance on delivering documents electronically, which you can find at .

5.

What if we sponsor more than one wrap fee program? You may prepare a single wrap fee program brochure
describing all the wrap fee programs you sponsor, or you may prepare separate wrap fee program brochures
that describe one or more of your wrap fee programs. If you prepare separate brochures, each brochure must
state that you sponsor other wrap fee programs and must explain how the client can obtain brochures for the
other programs.

Form ADV: Instructions for Part 2A Appendix 1

6.

Page 2

We provide portfolio management services under a wrap fee program that we sponsor. Must we deliver both
our wrap fee program brochure and our firm brochure to our wrap fee program clients? No, just the wrap fee
program brochure. If you or your supervised persons provide portfolio management services under a wrap fee
program that you also sponsor, your wrap fee program brochure must describe the investments and investment
strategies you (or your supervised persons) will use as portfolio managers. This requirement appears in Item
6.C of this Appendix.

7.

We provide other advisory services outside of our wrap fee programs. May we combine our wrap fee program
brochure into our firm brochure for clients receiving these other services? No. Your wrap fee program
brochure must address only the wrap fee programs you sponsor. See SEC rule 204-3(d)(1) and similar state
rules.

8.

Must we also deliver brochure supplements to wrap fee program clients? Yes. A wrap fee program brochure
does not take the place of any supplements required by Part 2B of Form ADV.

Part 2A Appendix 1 of Form ADV: Wrap Fee Program Brochure
Item 1

Cover Page

A. The cover page of your wrap fee program brochure must state your name, business address, contact
information, web site address (if you have one), and the date of the wrap fee program brochure.
Note: If you primarily conduct advisory business under a name different from your full legal name, and
you have disclosed your business name in Item 1.B of Part 1A of Form ADV, then you may use your
business name throughout your wrap fee program brochure.
B. Display on the cover page of your wrap fee program brochure the following (or other clear and concise
language conveying the same information) and identifying the document as a “wrap fee program
brochure”:
This wrap fee program brochure provides information about the qualifications and business
practices of [your name]. If you have any questions about the contents of this brochure, please
contact us at [telephone number and/or email address]. The information in this brochure has not
been approved or verified by the United States Securities and Exchange Commission or by any state
securities authority.
Additional information about [your name] also is available on the SEC’s website at
www.adviserinfo.sec.gov.
D. If you refer to yourself as a “registered investment adviser” or describe yourself as being “registered,”
include a statement that registration does not imply a certain level of skill or training.
Item 2

Material Changes

If you are amending your wrap fee program brochure for your annual update and it contains material changes from
your last annual update, identify and discuss those changes on the page immediately following the cover page of the
wrap fee program brochure or as a separate document accompanying the brochure. You must clearly state that you
are discussing only material changes since the last annual update of the wrap fee program brochure, and must
provide the date of the last annual update to the wrap fee program brochure.
Notes: You do not have to provide this information to a client or prospective client who has not received a
previous version of your wrap fee program brochure.
Item 3

Table of Contents

Provide a table of contents to your wrap fee program brochure.
Note: Your table of contents must be detailed enough so that your clients can locate topics easily. Your wrap fee
program brochure must follow the same order, and contain the same headings, as the items listed in this Appendix
1.
Item 4

Services, Fees and Compensation

A. Describe the services, including the types of portfolio management services, provided under each program.
Indicate the wrap fee charged for each program or, if fees vary according to a schedule, provide your fee
schedule. Indicate whether fees are negotiable and identify the portion of the total fee, or the range of fees,
paid to portfolio managers.

Form ADV: Part 2A Appendix 1

Page 2

B. Explain that the program may cost the client more or less than purchasing such services separately and
describe the factors that bear upon the relative cost of the program, such as the cost of the services if
provided separately and the trading activity in the client's account.
C. Describe any fees that the client may pay in addition to the wrap fee, and describe the circumstances under
which clients may pay these fees, including, if applicable, mutual fund expenses and mark-ups, markdowns, or spreads paid to market makers.
D. If the person recommending the wrap fee program to the client receives compensation as a result of the
client's participation in the program, disclose this fact. Explain, if applicable, that the amount of this
compensation may be more than what the person would receive if the client participated in your other
programs or paid separately for investment advice, brokerage, and other services. Explain that the person,
therefore, may have a financial incentive to recommend the wrap fee program over other programs or
services.
Account Requirements and Types of Clients

Item 5

If a wrap fee program imposes any requirements to open or maintain an account, such as a minimum account size,
disclose these requirements. If there is a minimum amount for assets placed with each portfolio manager as well as
a minimum account size for participation in the wrap fee program, disclose and explain these requirements. To the
extent applicable to your wrap fee program clients, describe the types of clients to whom you generally provide
investment advice, such as individuals, trusts, investment companies, or pension plans.
Item 6

Portfolio Manager Selection and Evaluation

A. Describe how you select and review portfolio managers, your basis for recommending or selecting portfolio
managers for particular clients, and your criteria for replacing or recommending the replacement of
portfolio managers for the program and for particular clients.
1.

Describe any standards you use to calculate portfolio manager performance, such as industry standards
or standards used solely by you.

2.

Indicate whether you review, or whether any third-party reviews, performance information to
determine or verify its accuracy or its compliance with presentation standards. If so, briefly describe
the nature of the review and the name of any third party conducting the review.

3.

If applicable, explain that neither you nor a third-party reviews portfolio manager performance
information, and/or that performance information may not be calculated on a uniform and consistent
basis.

B. Disclose whether any of your related persons act as a portfolio manager for a wrap fee program described
in the wrap fee program brochure. Explain the conflicts of interest that you face because of this
arrangement and describe how you address these conflicts of interest. Disclose whether related person
portfolio managers are subject to the same selection and review as the other portfolio managers that
participate in the wrap fee program. If they are not, describe how you select and review related person
portfolio managers.
C. If you, or any of your supervised persons covered under your investment adviser registration, act as a
portfolio manager for a wrap fee program described in the wrap fee program brochure, respond to Items
4.B, 4.C, 4.D (Advisory Business), 6 (Performance-Based Fees and Side-By-Side Management), 8.A
(Methods of Analysis, Investment Strategies and Risk of Loss) and 17 (Voting Client Securities) of Part 2A
of Form ADV.

Form ADV: Part 2A Appendix 1

Item 7

Page 3

Client Information Provided to Portfolio Managers

Describe the information about clients that you communicate to the clients’ portfolio managers, and how often or
under what circumstances you provide updated information.
Item 8

Client Contact with Portfolio Managers

Explain any restrictions placed on clients’ ability to contact and consult with their portfolio managers.
Item 9

Additional Information

A. Respond to Item 9 (Disciplinary Information) and Item 10 (Other Financial Industry Activities and
Affiliations) of Part 2A of Form ADV.
B. Respond to Items 11 (Code of Ethics, Participation or Interest in Client Transactions and Personal Trading),
13 (Review of Accounts), 14 (Client Referrals and Other Compensation), and 18 (Financial Information) of
Part 2A of Form ADV, as applicable to your wrap fee clients.
If you are registered or are registering with one or more state securities authorities, you must respond to the
following additional Item.
Item 10

Requirements for State-Registered Advisers

Respond to Item 19.E of Part 2A of Form ADV.

Instructions for Part 2B of Form ADV: Preparing a Brochure Supplement
1.

For which supervised persons must we prepare a brochure supplement? As an initial matter, if you have no
clients to whom you must deliver a brochure supplement (see Instruction 2 below), then you need not prepare
any brochure supplements. Otherwise, you must prepare a brochure supplement for the following supervised
persons:
(i)

Any supervised person who formulates investment advice for a client and has direct client contact;
and

(ii)

Any supervised person who has discretionary authority over a client’s assets, even if the
supervised person has no direct client contact. See SEC rule 204-3(b)(2) and similar state rules.

Note: No supplement is required for a supervised person who has no direct client contact and has
discretionary authority over a client’s assets only as part of a team. In addition, if discretionary advice is
provided by a team comprised of more than five supervised persons, brochure supplements need only be
provided for the five supervised persons with the most significant responsibility for the day-to-day
discretionary advice provided to the client. See SEC rule 204-3(b) and similar state rules.
2.

To whom must we deliver brochure supplements? Are there any exceptions?
You must deliver to a client the brochure supplements for each supervised person who provides advisory
services to that client. However, there are three categories of clients to whom you are not required to deliver
supplements. See SEC rule 204-3(c) and similar state rules.
First, you are not required to deliver supplements to clients to whom you are not required to deliver a firm
brochure (or a wrap fee program brochure).
Second, you are not required to deliver supplements to clients who receive only impersonal investment advice,
even if they receive a firm brochure.
Third, you are not required to deliver supplements to clients who are individuals who would be “qualified
clients” of your firm under SEC rule 205-3(d)(1)(iii). Those persons are:

3.

(i)

Any executive officers, directors, trustees, general partners, or persons serving in a similar
capacity, of your firm; or

(ii)

Any employees of your firm (other than employees performing solely clerical, secretarial or
administrative functions) who, in connection with their regular functions or duties, participate in
the investment activities of your firm and have been performing such functions or duties for at
least 12 months.

When must we deliver a supplement to a client?
You must deliver the supplement for a supervised person before or at the time that supervised person begins to
provide advisory services to a client.
You also must deliver to clients any update to the supplement that amends information in response to Item 3 of
Part 2B (disciplinary information). Such an amendment can be in the form of a “sticker” that identifies the
information that has become inaccurate and provides the new information and the date of the sticker.
Note: As a fiduciary, you have a continuing obligation to inform your clients of any material information that
could affect the advisory relationship. As a result, between annual updating amendments you must disclose
material changes to clients even if those changes do not trigger delivery of an updated supplement.
You may have a supervised person deliver supplements (including his own) on your behalf. Furthermore, if
you are an SEC-registered adviser, you not required to file brochure supplements or updates, but you must
maintain copies of them. See Instruction 5 of SEC General Instructions for Part 2 of Form ADV.

Form ADV: Part 2B

Page 2

4.

When must we update brochure supplements? You must update brochure supplements promptly whenever any
information in them becomes materially inaccurate.

5.

May we deliver brochure supplements electronically? Yes. You may deliver supplements using electronic
media. The SEC has published interpretive guidance on delivering documents electronically, which you can
find at . If you deliver a supplement electronically, you may
disclose in that supplement that the supervised person has a disciplinary event and provide a hyperlink to either
the BrokerCheck or the IAPD systems.

6.

Must brochure supplements be separate documents? No. If your firm brochure includes all the information
required in a brochure supplement, you do not need a separate supplement. Smaller firms with just a few
supervised persons may find it easier to include all supplement information in their firm brochure, while larger
firms may prefer to use a firm brochure and separate supplements. If supplement information is included in the
firm brochure, however, the supplements must be included at the end of the brochure. In addition, each
supplement must follow the same order as the supplement items listed in Part 2B, and contain the same
headings.
You may prepare supplements for groups of supervised persons. A group supplement, or a firm brochure
presenting supplement information about supervised persons, must present information in a separate section for
each supervised person.

7.

Must an adviser who is a sole proprietor provide his own brochure supplement to clients? No, if that
information is included in the firm brochure.

8.

May we include information not required by an item in a brochure supplement? Yes. If you include
information not required by an item, however, you may not include so much additional information that the
required information is obscured.

9.

Are we required to file the brochure supplements? If you are registered or are registering with the SEC, you are
not required to file your brochure supplements, but you are required to maintain copies of all supplements and
amendments to supplements in your files. See SEC rule 204-2(a)(14)(i). If you are registered or are registering
with one or more state securities authorities, you must file through IARD a copy of the brochure supplement
for each supervised person doing business in that state.

Part 2B of Form ADV: Brochure Supplement
Item 1

Cover Page

A. Include the following on the cover page of the supplement:
1.
2.
3.

The supervised person’s name, business address and telephone number (if different from yours).
Your firm’s name, business address and telephone number. If your firm brochure uses a business
name for your firm, use the same business name for the firm in the supplement.
The date of the supplement.

B. Display on the cover page statements containing the following or other clear and concise language
conveying the same information, and identifying the document as a “brochure supplement:”
This brochure supplement provides information about [name of supervised person] that supplements
the [name of advisory firm] brochure. You should have received a copy of that brochure. Please
contact [service center or name and/or title of your contact person] if you did not receive [name of
advisory firm]’s brochure or if you have any questions about the contents of this supplement.
Additional information about [name of supervised person] is available on the SEC’s website at
www.adviserinfo.sec.gov.
Note: You do not have to include this statement directing clients to the public website unless the
supervised person is an investment adviser representative required to register with state securities
authorities. The above information must be on the cover page of the supplement but need not be the only
information on the cover page of the supplement. If other information is included on the cover page of the
supplement, the above information must be on the top of the first page of the supplement.
Item 2

Educational Background and Business Experience

Disclose the supervised person’s name, age (or year of birth), formal education after high school, and business
background (including an identification of the specific positions held) for the preceding five years. If the supervised
person has no high school education, no formal education after high school, or no business background, disclose this
fact. You may list any professional designations held by the supervised person, but if you do so, you must provide a
sufficient explanation of the minimum qualifications required for each designation to allow clients to understand the
value of the designation.
Item 3

Disciplinary Information

If there are legal or disciplinary events material to a client's or prospective client's evaluation of the supervised
person, disclose all material facts regarding those events.
Items 3.A, 3.B, 3.C, and 3.D below list specific legal and disciplinary events presumed to be material for this
Item. If the supervised person has been involved in one of these events, you must disclose it under this Item for
ten years following the date of the event, unless (1) the event was resolved in the supervised person’s favor, or
was reversed, suspended or vacated, or (2) you have rebutted the presumption of materiality to determine that
the event is not material (see Note below). For purposes of calculating this ten-year period, the “date” of an
event is the date the final order, judgment, or decree was entered, or the date any rights of appeal from
preliminary orders, judgments or decrees lapsed.
Items 3.A, 3.B, 3.C, and 3.D do not contain an exclusive list of material disciplinary events. If the supervised
person has been involved in a legal or disciplinary event that is not listed in Items 3.A, 3.B, 3.C, or 3.D but is
material to a client's or prospective client's evaluation of the supervised person's integrity, you must disclose the

Form ADV: Part 2B

Page 2

event. Similarly, even if more than ten years have passed since the date of the event, you must disclose the
event if it is so serious that it remains currently material to a client’s or prospective client’s evaluation.
If you deliver a supplement electronically and if a particular disclosure required below for the supervised
person is provided through either the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck system
or the IAPD, you may satisfy that particular disclosure obligation by including in that supplement (i) a
statement that the supervised person has a disciplinary history, the details of which can be found on FINRA’s
BrokerCheck system or the IAPD, and (ii) a hyperlink to the relevant system with a brief explanation of how the
client can access the disciplinary history. The BrokerCheck link is www.finra.org/brokercheck; the IAPD link
is www.adviserinfo.sec.gov.
A. A criminal or civil action in a domestic, foreign or military court of competent jurisdiction in which the
supervised person
1.

was convicted of, or pled guilty or nolo contendere (“no contest”) to (a) any felony; (b) a misdemeanor
that involved investments or an investment-related business, fraud, false statements or omissions,
wrongful taking of property, bribery, perjury, forgery, counterfeiting, or extortion; or (c) a conspiracy
to commit any of these offenses;

2.

is the named subject of a pending criminal proceeding that involves an investment-related business,
fraud, false statements or omissions, wrongful taking of property, bribery, perjury, forgery,
counterfeiting, extortion, or a conspiracy to commit any of these offenses;

3.

was found to have been involved in a violation of an investment-related statute or regulation; or

4.

was the subject of any order, judgment, or decree permanently or temporarily enjoining, or otherwise
limiting, the supervised person from engaging in any investment-related activity, or from violating any
investment-related statute, rule, or order.

B. An administrative proceeding before the SEC, any other federal regulatory agency, any state regulatory
agency, or any foreign financial regulatory authority in which the supervised person
1.

was found to have caused an investment-related business to lose its authorization to do business; or

2.

was found to have been involved in a violation of an investment-related statute or regulation and was
the subject of an order by the agency or authority
(a) denying, suspending, or revoking the authorization of the supervised person to act in an
investment-related business;
(b) barring or suspending the supervised person's association with an investment-related business;
(c) otherwise significantly limiting the supervised person's investment-related activities; or
(d) imposing a civil money penalty of more than $2,500 on the supervised person.

C. A self-regulatory organization (SRO) proceeding in which the supervised person
1.

was found to have caused an investment-related business to lose its authorization to do business; or

2.

was found to have been involved in a violation of the SRO’s rules and was: (i) barred or suspended
from membership or from association with other members, or was expelled from membership;
(ii) otherwise significantly limited from investment-related activities; or (iii) fined more than $2,500.

Form ADV: Part 2B

Page 3

D. Any other hearing or formal adjudication in which a professional attainment, designation, or license of the
supervised person was revoked or suspended because of a violation of rules relating to professional
conduct. If the supervised person resigned (or otherwise relinquished the attainment, designation, or
license) in anticipation of such a hearing or formal adjudication (and the adviser knows, or should have
known, of such resignation or relinquishment), disclose the event.
Note: You may, under certain circumstances, rebut the presumption that a disciplinary event is material. If an
event is immaterial, you are not required to disclose it. When you review a legal or disciplinary event involving
the supervised person to determine whether it is appropriate to rebut the presumption of materiality, you should
consider all of the following factors: (1) the proximity of the supervised person to the advisory function; (2) the
nature of the infraction that led to the disciplinary event; (3) the severity of the disciplinary sanction; and (4) the
time elapsed since the date of the disciplinary event. If you conclude that the materiality presumption has been
overcome, you must prepare and maintain a file memorandum of your determination in your records. See SEC
rule 204-2(a)(14)(iii) and similar state rules.
Item 4

Other Business Activities

A. If the supervised person is actively engaged in any investment-related business or occupation, including if
the supervised person is registered, or has an application pending to register, as a broker-dealer, registered
representative of a broker-dealer, futures commission merchant (“FCM”), commodity pool operator
(“CPO”), commodity trading advisor (“CTA”), or an associated person of an FCM, CPO, or CTA, disclose
this fact and describe the business relationship, if any, between the advisory business and the other
business.
1.

If a relationship between the advisory business and the supervised person’s other financial industry
activities creates a material conflict of interest with clients, describe the nature of the conflict and
generally how you address it.

2.

If the supervised person receives commissions, bonuses or other compensation based on the sale of
securities or other investment products, including as a broker-dealer or registered representative, and
including distribution or service (“trail”) fees from the sale of mutual funds, disclose this fact. If this
compensation is not cash, explain what type of compensation the supervised person receives. Explain
that this practice gives the supervised person an incentive to recommend investment products based on
the compensation received, rather than on the client’s needs.

B. If the supervised person is actively engaged in any business or occupation for compensation not discussed
in response to Item 4.A, above, and the other business activity or activities provide a substantial source of
the supervised person’s income or involve a substantial amount of the supervised person’s time, disclose
this fact and describe the nature of that business. If the other business activities represent less than 10
percent of the supervised person’s time and income, you may presume that they are not substantial.
Item 5

Additional Compensation

If someone who is not a client provides an economic benefit to the supervised person for providing advisory
services, generally describe the arrangement. For purposes of this Item, economic benefits include sales awards and
other prizes, but do not include the supervised person’s regular salary. Any bonus that is based, at least in part, on
the number or amount of sales, client referrals, or new accounts should be considered an economic benefit, but other
regular bonuses should not.

Form ADV: Part 2B

Item 6

Page 4

Supervision

Explain how you supervise the supervised person, including how you monitor the advice the supervised person
provides to clients. Provide the name, title and telephone number of the person responsible for supervising the
supervised person’s advisory activities on behalf of your firm.
If you are registered or are registering with one or more state securities authorities, you must respond to the
following additional Item.
Item 7

Requirements for State-Registered Advisers

A. In addition to the events listed in Item 3 of Part 2B, if the supervised person has been involved in one of the
events listed below, disclose all material facts regarding the event.
1.

An award or otherwise being found liable in an arbitration claim alleging damages in excess of $2,500,
involving any of the following:
(a)
(b)
(c)
(d)
(e)

2.

an investment or an investment-related business or activity;
fraud, false statement(s), or omissions;
theft, embezzlement, or other wrongful taking of property;
bribery, forgery, counterfeiting, or extortion; or
dishonest, unfair, or unethical practices.

An award or otherwise being found liable in a civil, self-regulatory organization, or administrative
proceeding involving any of the following:
(a)
(b)
(c)
(d)
(e)

an investment or an investment-related business or activity;
fraud, false statement(s), or omissions;
theft, embezzlement, or other wrongful taking of property;
bribery, forgery, counterfeiting, or extortion; or
dishonest, unfair, or unethical practices.

B. If the supervised person has been the subject of a bankruptcy petition, disclose that fact, the date the
petition was first brought, and the current status.