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Federal Register / Vol. 86, No. 42 / Friday, March 5, 2021 / Rules and Regulations
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2 If you answer yes to L1c, d, or e above, do you pay or otherwise provide cash or non-cash compensation, directly or indirectly, in connection with the use of testimonials, endorsements, or third-party ratings?
Y N
3 Do any of your advertisements include hypothetical performance?
Y N
4 Do any of your advertisements include predecessor performance?
Y N

FORM ADV: GLOSSARY OF TERMS
1. Advertisement: i Any direct or indirect communication an investment adviser makes to more than one person, or to one or more persons if the communication includes hypothetical performance, that offers the investment advisers investment advisory services with regard to securities to prospective clients or investors in a private fund advised by the investment adviser or offers new investment advisory services with regard to securities to current clients or investors in a private fund advised by the investment adviser, but does not include: A Extemporaneous, live, oral communications; B
information contained in a statutory or regulatory Notice, filing, or other required communication, provided that such information is reasonably designed to satisfy the requirements of such notice, filing, or other required communication; or C a communication that includes hypothetical performance that is provided: 1 In response to an unsolicited request for such information from a prospective or current client or investor in a private fund advised by the investment adviser; or 2 to a prospective or current investor in a private fund advised by the investment adviser in a one-on-one communication;
and ii any endorsement or testimonial for which an investment adviser provides compensation, directly or indirectly, but does not include any information contained in a statutory or regulatory notice, filing, or other required communication, provided that such information is reasonably designed to satisfy the requirements of such notice, filing, or other required communication. Used in: Part 1A, Item 5
2. Advisory Affiliate: Your advisory affiliates are 1 all of your officers, partners, or directors or any person performing similar functions; 2 all persons directly or indirectly controlling or controlled by you; and 3 all of your current employees other than employees performing only clerical,
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administrative, support or similar functions.
If you are a separately identifiable department or division SID of a bank, your advisory affiliates are: 1 All of your banks employees who perform your investment advisory activities other than clerical or administrative employees; 2 all persons designated by your banks board of directors as responsible for the day-to-day conduct of your investment advisory activities including supervising the employees who perform investment advisory activities; 3 all persons who directly or indirectly control your bank, and all persons whom you control in connection with your investment advisory activities; and 4 all other persons who directly manage any of your investment advisory activities including directing, supervising or performing your advisory activities, all persons who directly or indirectly control those management functions, and all persons whom you control in connection with those management functions. Used in: Part 1A, Items 7, 11, DRPs; Part 1B, Item 2
3. Annual Updating Amendment:
Within 90 days after your firms fiscal year end, your firm must file an annual updating amendment, which is an amendment to your firms Form ADV
that reaffirms the eligibility information contained in Item 2 of Part 1A and updates the responses to any other item for which the information is no longer accurate. Used in: General Instructions;
Part 1A, Instructions, Introductory Text, Item 2; Part 2A, Instructions, Appendix 1 Instructions; Part 2B, Instructions 4. Borrowings: Borrowings include secured borrowings and unsecured borrowings, collectively. Secured borrowings are obligations for borrowed money in respect of which the borrower has posted collateral or other credit support and should include any reverse repos i.e., any sale of securities coupled with an agreement to repurchase the same or similar securities at a later date at an agreed price. Unsecured borrowings are obligations for borrowed money in respect of which the borrower has not posted collateral or other credit support. Used in: Part 1A, Instructions, Item 5, Schedule D
5. Brochure: A written disclosure statement that you must provide to clients and prospective clients. See SEC
rule 2043; Form ADV, Part 2A. Used in: General Instructions; Used throughout Part 2
6. Brochure Supplement: A written disclosure statement containing information about certain of your supervised persons that your firm is required by Part 2B of Form ADV to
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provide to clients and prospective clients. See SEC rule 2043; Form ADV, Part 2B. Used in: General Instructions;
Used throughout Part 2
7. Charged: Being accused of a crime in a formal complaint, information, or indictment or equivalent formal charge. Used in: Part 1A, Item 11;
DRPs 8. Client: Any of your firms investment advisory clients. This term includes clients from which your firm receives no compensation, such as family members of your supervised persons. If your firm also provides other services e.g., accounting services, this term does not include clients that are not investment advisory clients. Used throughout Form ADV and Form ADV
W 9. Commodity Derivative: Exposures to commodities that you do not hold physically, whether held synthetically or through derivatives whether cash or physically settled. Used in: Part 1A, Schedule D
10. Control: The power, directly or indirectly, to direct the management or policies of a person, whether through ownership of securities, by contract, or otherwise.
Each of your firms officers, partners, or directors exercising executive responsibility or persons having similar status or functions is presumed to control your firm.
A person is presumed to control a corporation if the person: i Directly or indirectly has the right to vote 25
percent or more of a class of the corporations voting securities; or ii has the power to sell or direct the sale of 25 percent or more of a class of the corporations voting securities.
A person is presumed to control a partnership if the person has the right to receive upon dissolution, or has contributed, 25 percent or more of the capital of the partnership.
A person is presumed to control a limited liability company LLC if the person: i Directly or indirectly has the right to vote 25 percent or more of a class of the interests of the LLC; ii has the right to receive upon dissolution, or has contributed, 25 percent or more of the capital of the LLC; or iii is an elected manager of the LLC.
A person is presumed to control a trust if the person is a trustee or managing agent of the trust.
Used in: General Instructions; Part 1A, Instructions, Items 2, 7, 10, 11, 12, Schedules A, B, C, D, R; DRPs 11. Credit Derivative: Single name credit default swap, including loan credit default swap, credit default swap referencing a standardized basket of
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