The Staff of the Division of Investment Management agreed to not recommend enforcement action under Investment Advisers Act of 1940 Rule 204-3 against unaffiliated registered investment advisers, who manage client assets if the subadviser delivers its Form ADV Part 2, to the adviser, rather than the client.  See Goldman Sachs & Co., Inc., SEC No-Action Letter, avail. 6/20/13,

The Staff recapped counsel’s representations where a registered investment adviser sponsors wrap-fee or managed account programs or arrangements, and clients grant it discretionary authority over their accounts, including the discretionary authority to select subadvisers to manage client assets.  This adviser currently includes more than 40 unaffiliated subadvisers within the discretionary programs.  Depending on the program, the adviser may have discretionary authority to manage client assets directly, or it, generally, hires and allocates client assets across multiple subadvisers on a client’s behalf.  If a subadviser manages a client’s assets, and, as such, may have an investment advisory relationship with the client, the Staff noted the subadviser must provide the client with various disclosures, including information required by Form ADV Part 2A and 2B.

Nonetheless, the Staff said it would not recommend enforcement action under Advisers Act Rule 204-3 against an unaffiliated subadviser if a subadviser selected by the adviser to manage its client assets delivers its brochure document to the adviser rather than the client.