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SEC Warns Advisers ADV Forms Are Not the Place to Boast

Form advThe SEC is reportedly cracking down on advisors who exaggerate their education or credentials on ADV forms. So while puffing may be acceptable at dinner parties, depending on personal style, advisors must stick to the facts when filing reports with the SEC.

Rather than simply taking advisers at their word regarding the education, business background, disciplinary disclosures and credentials of their personnel, the SEC is now actively verifying these claims. This reportedly includes Internet background searches and crosschecking the information provided in other regulatory filings, such as Form U-4s.

SEC officials confirmed the stepped-up scrutiny in this area.  “Indeed, the SEC is independently confirming that individuals truly have the credentials they list on ADVs,” said Martin Murphy, associate regional director for the SEC in Los Angeles.

“Credentials on the ADVs are sent out for accuracy,” he added.

With the annual ADV amendments due in the next quarter for many firms, now may be a good time to start verifying professional designations and other disclosure regarding your firm’s personnel in the Form ADV Part 2B brochure supplements.  Some information may be verified by searching the Internet, such as the CFA Institute’s website, while others may require a call or an e-mail.  In this process, it may also be worthwhile to consider the adequacy of your vetting procedures for new hires.

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If your company would like to strengthen its business practices, please contact us today so we can leverage our experience to create real-life business and legal solutions to help your business thrive.