4 Useful Hacks for the SEC’s IAPD Disclosure Site

Each search result on the IAPD will show whether the individual is registered with an RIA, a broker-dealer or both. A hyperlink will take you directly to the individual's BrokerCheck report if he or she is registered with a broker-dealer. In the event you fly FINRA's flag as opposed to the SEC's, you can also see hyperlinked IAR registrations on the BrokerCheck website as well. 

Hack 3: Look Up Unregistered Advisory Firms and Reps 

If an advisory firm or a rep was at some point registered with the SEC and/or a state within the last 10 years, there will be a report available through IAPD. In addition, search results will also display individuals who have ever been:

1. the subject of a final regulatory event
2. convicted of or pleaded guilty or no contest to a crime
3. the subject of a civil injunction or civil court finding involving a violation of any investment-related statute(s) or regulation(s)
4. a respondent or defendant or the subject of an arbitration or civil litigation which resulted in an award, decision or judgment for a customer that has been reported on a registration form. This assumes the regulatory event hasn't been expunged, of course. 

Most states allow a two-year registration gap for individuals who are not currently registered as an IAR but wish to reregister without retaking the Series 65, so the ability to look up an individual's registration history — even if not currently registered — will help determine whether an examination (or exemption) is needed. 

Fun fact: Bernie Madoff's BrokerCheck report is searchable through IAPD. It's 26 pages long, with 19 of those pages solely dedicated to his disclosures. He passed the Series 1 exam on March 29, 1960. 

Hack 4: Conduct Due Diligence (Even on Yourself)

Above all else, IAPD is an excellent starting point to conduct due diligence on advisory firms and their reps.

The report generated for reps contains the following information: 

• Current employer(s)
  • Including the states in which the individual is registered with that employer
• Qualifications
  • Including examinations passed and professional designations
• Registration history
  • Including former adviser-employers as well as former non-adviser employers (i.e. your employment history, regardless of occupation, for the last 10 years)
  • Including "other business activities" that the individual is currently engaged in "either as a proprietor, partner, officer, director, employee, trustee, agent or otherwise"
• Disclosures
  • Including "certain criminal charges and convictions, formal investigations and disciplinary actions initiated by regulators, customer disputes and arbitrations, and financial disclosures such as bankruptcies and unpaid judgments or liens"

The report generated for advisory firms is essentially the ADV Part 1 and Part 2, both of which contain a treasure trove of information that can be used for a variety of reasons. The wide range of information available is beyond the scope of this article, but I find the following sections of the ADV Part 1 to be particularly helpful:

• Item 5: Information About Your Advisory Business
  • Includes employee headcount and demographics, client headcount and demographics, compensation arrangements, regulatory assets under management, advisory activities, financial planning activities and wrap programs
• Item 7A: Financial Industry Affiliations
  • Includes affiliations with broker-dealers, other advisory firms, banks, trust companies, accountants, lawyers etc.
• Item 11: Disclosure Information
  • Includes the disciplinary history for the advisory firm and all of its affiliates
• Schedule A: Direct Owners and Executive Officers
  • Includes information on advisory firm management, parent companies and general ownership structure
• Schedule D (essentially a catch-all for other information not otherwise reported in any Item or Schedule) 

If your thirst for data is not quenched by the standard reports available through IAPD, the SEC also makes massive aggregate reports on all registered advisory firms and reps available in XML format through the "Investment Adviser Data" tab. 

I highly recommend searching for yourself and your advisory firm on IAPD periodically, lest there by any discrepancies or inaccurate information that needs to be corrected. Remember, everything you can view through IAPD, your current and prospective clients can view as well. 

Nice Job, SEC

I have to give the SEC props for what is a fairly intuitive and comprehensive tool that can be used by investors and their advisers alike. It's not perfect, but it does an admirable job of translating and presenting the reams of data that our regulator takes in on a daily basis.

Check it out: You might find it more useful than you think.

Save

Save