SECOND OF A SERIES ON ADV PART 2
The SEC has recently updated its Q&A on Part 2 of Form ADV. It clarified certain sections of the new form and explained how to respond in certain scenarios. Key take-aways from the update include:
Hedge Funds/Private Funds
- Advisers to private funds will meet their delivery obligations under Rule 204-3 if they deliver the Form ADV Part 2 and brochure supplements to the private fund's legal representative, general partner, or person acting in a similar capacity for the fund(s).
- Hedge funds and other private fund advisers that register with the SEC may make reference to the fund's offering memoranda in response to Item 8.B that describes the material risks associated with investment strategies. This allows these registrants to shorten their response to this item and provide summary information as opposed to the in-depth detail of the fundís PPM by incorporating it by reference.
- SEC registrants that use multiple investment strategies MUST disclose the risks associated with EACH strategy in response to Item 8.B. If the adviser already has separate documents that disclose the risk for each strategy, the adviser may discuss the risks in summary and refer clients to the additional disclosure documents for additional information.
- Offshore advisers to offshore private funds DO NOT have to file Form ADV Part 2.
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