Rule 204-5 under the Investment Advisers Act of 1940

OMB 3235-0767

OMB 3235-0767

On April 18, 2018, the Securities and Exchange Commission (the “Commission” or “SEC”) issued a release proposing, among other things, new rule 204-5 and amendments to Form ADV under the Investment Advisers Act of 1940. The proposal would require registered broker-dealers and registered investment advisers to provide a brief relationship summary to retail investors to inform them about certain aspects of the relationships and services the firm offers (the “relationship summary”). Proposed rule 204-5 would require that an investment adviser: (i) deliver the relationship summary to each retail investor before or at the time the adviser enters into an investment advisory agreement as well as to existing clients one time within a specified time period after the effective date of the proposed amendments; (ii) deliver the relationship summary to existing clients before or at the time (a) a new account is opened that is different from the retail investor’s existing account(s), or (b) changes are made to the retail investor’s existing account(s) that would materially change the nature and scope of the adviser’s relationship with the retail investor; (iii) post a current version of their relationship summary prominently on their public website (if they have one); and (iv) communicate any changes in an updated relationship summary to retail investors who are existing clients or customers of the firm within 30 days after the updates are required to be made and without charge. A firm would be permitted to deliver the relationship summary (including updates) electronically, consistent with the Commission’s guidance regarding electronic delivery.

The latest form for Rule 204-5 under the Investment Advisers Act of 1940 expires 2023-01-31 and can be found here.

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