For many different reasons a hedge fund manager will decide to de-register as an investment advisor. The manager may no longer be required to be registered or a manager may have registered simply for marketing purposes and has found that it is too much of a hassle (and cost) to be registered. In such instances a hedge fund manager can withdrawal from registration by filing Form ADV-W through the IARD (Investment Advisor Registration Depository) system. The process for de-registering is substantially the same whether the manager is registered with the SEC or with the state securities commission. This article will discuss (i) issues with de-registration for the hedge fund manager and (ii) detail the process of deregistering.
Can a hedge fund manager withdraw from investment advisor registration?
Provided that a hedge fund manager is not required to be registered under the applicable federal or state securities laws, the manager would be allowed to de-register. However, a hedge fund manager needs to be aware of what the hedge fund’s offering documents say with regard to whether the manager can voluntarily de-register. If the fund’s offering documents are silent on this issue then the hedge fund manager will likely need gain the consent of the investors in the fund before moving forward with the deregistration. Additionally, if the manager has ERISA assets in the fund, the manager may not be able to de-register. Both of these issues should be discussed with the hedge fund lawyer prior to filing the ADV-W.
Form ADV-W and the IARD
The form ADV-W is a simple form which asks for basic information on the investment advisor. A sample form ADV-W can be found here: Form ADV-W (instructions on completing the Form ADV-W can be found here: Form ADV-W Instructions. The manager’s lawyer can complete all of the filing provided that the firm or the manager has the IARD login and password. If the manager has lost the IARD password, it can be requested by calling….
The IARD website provides the following description of the IARD:
The Investment Adviser Registration Depository (IARD SM) is an electronic filing system that facilitates Investment Adviser registration, regulatory review, and the public disclosure information of Investment Adviser firms. FINRA is the developer and operator of the IARD system. The system has been developed according to the requirements of its sponsors, the Securities and Exchange Commission (SEC) and the North American Securities Administrators Association (NASAA), along with those of an Industry Advisory Council representing the Investment Adviser firms.
Information Required by Form ADV-W
The Form ADV-W requires the manager to provide the following information:
- Identifying information (name, CRD number, etc.)
- Status of Adviosry Business (date ceased business, reason for withdrawal)
- Custody of Client Assets
- Money Owed to Clients
- Advisory Contracts (have the contracts been assigned?)
- Judgements and Liens
- Statement of Financial Condition
- Books and Records (each person who will keep a copy of the books and records, location of books and records)
- Additional Information (additional space for completing the answers to the questions)
Record Keeping Requirement
Generally an investment advisor which files an ADV-W will need to maintain all of its books and records for a period of time after the filing (usually 3-5 years). These requirements will be different depending on the state of registration.
If you have any questions or would like help filing an ADV-W, please contact us. Other related hedge fund and investment advisory articles include: