Commonly Used Words
Like many areas of professional regulation, the investment adviser and investment adviser representative fields utilize a number of words and expressions that denote a specific meaning. The following are examples of some that are used with regular frequency.
“Brochure” is the name often used when referring to Part 2 of Form ADV. The brochure, which investment advisers are required to provide to consumers, provides information concerning the fees charged by the adviser, background of the adviser and its employees (investment adviser representatives), its business practices and any conflicts of interest that may exist between the adviser and you as a customer.
“CRD” refers to the Internet based registration and licensing system for securities firms, that is also used by state and federal regulators. The CRD system is a joint effort of the Financial Industry Regulatory Authority (FINRA), North American Securities Administrators Association (which includes the Illinois Securities Department as a member), and the federal Securities and Exchange Commission. The CRD system currently contains information for nearly 7,000 securities firms and over 600,000 licensed individuals.
“Disclosure” refers to the reported disclosure of customer disputes, disciplinary and regulatory actions, as well as any criminal or civil actions. For an investment adviser firm, these items must be disclosed on their Form ADV. For individual investment adviser representatives, these items are reported on their Form U4.
“Form ADV” is the application form used by investment advisers to apply for registration as either a state or federal covered investment adviser. This form discloses information concerning the adviser’s ownership, States in which it is registered, the amount of assets under management, disciplinary information, and other detailed information for each investment adviser.
“Form U4” is the universal form used within the securities industry for the registration of investment adviser representatives by the employing firm with either federal or state regulators. This form provides information concerning an individual’s employment history, securities examinations the representative has passed, licensing or registration status within states and disciplinary history.
“IARD” refers to the Internet based registration system for investment advisers. It is a companion system to the CRD system. First implemented in 2001, the Investment Adviser Registration Depository (IARD) is a joint effort of the Financial Industry Regulatory Authority (FINRA), North American Securities Administrators Association (which includes the Illinois Securities Department as a member), and the federal Securities and Exchange Commission.
“Illinois Securities Law of 1953” is the state law that governs the regulation of investment adviser firms and individual investment adviser representatives within the State of Illinois.
“NSMIA” refers to the 1996 legislation enacted by the U.S. Congress that became law in July 1997. The legislation provided for the joint regulatory oversight of investment advisers by the federal Securities and Exchange Commission and the state securities regulators (in Illinois, the Illinois Securities Department). NSMIA stands for the National Securities Markets Improvement Act.
“SEC” refers to the U.S. Securities and Exchange Commission, the federal agency that among other prescribed duties, has regulatory oversight for investment advisers with $25 million or more in assets under management.
DISCLAIMER
The Secretary of State, Illinois Securities Department or their information providers shall not be liable regardless of the cause or duration, for any errors, inaccuracies, omissions or untimeliness of the information, or for any delay or interruption in the transmission thereof to the user, or for any claims or losses arising therefrom.
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