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Investment Advisors - Fulfilling Form ADV Social Media Disclosure Requirements

by Sylva on September 26, 2016 in SEC

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What’s the deal?

In recent news, the SEC has made amendments to reporting requirements for investment advisors, changing the way in which the SEC evaluates the risk profiles of investment advisors, and helping to reduce the likelihood of fraudulent activity. The amendments concern what’s known as “Form ADV”, a form required for investment advisors to register with the SEC. A large part of the form asks investment advisors for details on their business, including their clients’ history, employees, business practices etc.

What’s changed?

The SEC has amended Form ADV so that it now (under section 1.1 of schedule D) requires investment advisors to disclose more information about their business. Prior to these amendments, advisors were only expected to disclose information about their public corporate websites. But as of now, they will also be required to list their website, including accounts on Twitter, Facebook or LinkedIn, and the address of each of the adviser’s social media pages, only where the adviser controls the content of the page. (Employee social media accounts are not required). The SEC has explained that these disclosures will assist it in understanding how advisors are typically using social media to communicate with current and prospective clients.

What are the implications?

Asking for this information only means that the SEC will be giving social media properties more weight during audits, just as much as they do with websites and other information. This means advisors must take extra precautions to the content communicated through their social channels. Not only that, but knowing that the SEC will now be expecting to see this information, advisors should start taking a second look at their compliance process and find the best way to collect and save their data, making it easily available upon request.

Check out the following helpful resources for more info on social media archiving for financial services.