SEC Form ADV starts to open the kimono of Hedge Fund practices

Want to know more about registered investment advisers?  

You will obtain a plethora of information on registered investment adviser firms on the SEC web site, http://www.adviserinfo.sec.gov  This website will have the firm’s Form ADV for those Firms registered with the SEC.  Form ADV contains information about an investment adviser and its business operations.  See below for a list of what is included in Form ADV.


The Web site will also allow you to search for an individual investment adviser representative (RIA) and view that individual's professional background and conduct including current registrations, employment history, and disclosures about certain disciplinary events involving the individual.

Part 1A  This form is filed by all member firms.  The form asks many yes or no questions but it also includes some interesting aspects of the member Firm's makeup.  See below for areas in part 1A

•           Identifying Information
•          SEC Registration 
•          Form Of Organization
•         Successions 
•         Information About Your Advisory Business 
•        Other Business Activities 
•        Financial Industry Affiliations 
•         Participation or Interest in Client Transactions 
•        Custody 
•        Control Persons 
•        Disclosure Information 
•        Small Businesses 

Part 2 Disclosures.  Here are the typical disclosures a firm will make.  This is not an exhaustive listing.

• Material Changes
• Advisory Business
• Fees and Compensation
• Performance-Based Fees and Side-By-Side Management
• Types of Clients
• Method of Analysis, Investment Strategies and Risk of
• Disciplinary Information Item
• Other Financial Industry Activities and affiliates
• Code of Ethics, Participation or Interest in Client Transactions and Personal
• Trading
• Brokerage Practices
• Review of Accounts
• Client Referrals and Other Compensation
• Custody Investment
• Discretion Voting
• Client Securities
• Financial Information
• Management Persons
• Soft Dollar Vendors
• Advisory Business

Given the industry history of opaque practices and closely guarding as much information as possible, it is no wonder that 1/3 of the hedge funds over $1 billion have yet to register.  Maybe it will all go away????NOT